The dollar corrected lower against the euro and other major currencies one trading day after Fed Chair Kevin Warsh's hawkish Jackson Hole speech had pushed the greenback higher. EUR/USD rose 0.27% to 1.1615 even as Treasury yields climbed, after Treasury Secretary Scott Bessent noted the Fed does not typically raise rates in response to a supply shock.
EUR/USD rose 0.27% to 1.1615, as the dollar retreated against most major currencies. The move came one trading day after Warsh delivered a more hawkish message at Jackson Hole, a speech that had sent Treasury yields and the dollar higher while lifting the probability of a September rate hike back toward 65%.
Bessent's supply-shock comment weighs on the dollar
Bessent may have given dollar sellers an additional reason to sell when he noted that the Federal Reserve traditionally does not raise rates in response to a supply shock. The market-implied probability of a September rate hike was little changed, but his comment could provide Warsh with some justification to delay tightening. However, monetary policy is decided by the full FOMC, and several Fed officials continue to lean toward a rate increase.
Yields climb despite reassurance on the bond market
Bessent also played down concerns about rising Treasury yields, calling the US bond market the most resilient in the world, and noted the 10-year yield is near where it was when President Trump took office. Despite those comments, the 10-year yield finished up 3.4 basis points at 4.756%, while the 30-year rose 4.1 basis points to 5.2486%, led by the longer end of the curve.
The dollar's declines were not uniform. It fell the most against the Canadian dollar, down 0.31%, and the euro, down 0.27%, while declines against the yen and franc were more modest and the greenback was little changed against sterling, the Australian dollar and the New Zealand dollar.
Source: Investinglive RSS Breaking News Feed
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