© Reuters. File photo: Four thousand US dollars are taken out by a banker counting notes at a bank in Westminster, Colorado, on November 3, 2009. Reuters/Rick Wilking/file photo
By Rae V
SINGAPORE (Reuters) – U.S. Treasury yields fell broadly on Wednesday due to dovish comments from the Federal Reserve, as traders looked for clues on the interest rate outlook ahead of the central bank’s policy meeting later in the day. Looked at the minutes.
Several Fed officials have indicated in recent days that the US central bank does not need to tighten monetary policy any more than initially thought.
Atlanta Fed Bank President Raphael Bostic said Tuesday the central bank does not need to raise borrowing costs any further, and Minneapolis Fed President Neel Kashkari made similar comments later in the day.
The comments pushed the greenback to a two-week trough against a basket of currencies in the previous session, with a fall near that level in early Asia trading. It last stood at 105.66.
Hit a three-week high of $1.2296, while the euro last bought $1.0606, not far from Tuesday’s more than two-week high of $1.0620.
“The Fed is moving away from further rate hikes, and its tightening bias could also be removed by December,” said Thierry Weizmann, global FX and interest rates strategist at Macquarie.
US Treasury yields have similarly declined following the Fed’s dovish comments, with two-year yields, which typically reflect near-term rate expectations, hitting a one-month low of 4.9260% on Tuesday. It was last at 4.9675%.
The benchmark 10-year yield was 4.6468%. [US/]
Attention now turns to the minutes of the Fed’s September policy meeting due on Wednesday, which could give further clues on its interest rate outlook. US inflation data is due next day.
“I think markets will be particularly interested in whether the (Federal Open Market Committee) will follow through on (its) forecast of an additional 25-basis-point hike in its latest dot plot,” said Carol Kong, currency strategist at Commonwealth. No.” Bank of Australia (CBA).
“While any comments are considered a bit dovish, I think yields could continue to slide and that could put further pressure on the US dollar.”
The Australian dollar rose to a nearly one-week high of $0.6440, while the New Zealand dollar hit a two-month high of $0.6050, helped slightly by a report that China is considering new stimulus measures.
The two antipodean currencies are often used as liquid proxies for the yuan.
China is considering increasing its budget deficit for 2023 as the government prepares to introduce a new round of stimulus to help the economy meet Beijing’s annual growth target, Bloomberg News reported on Tuesday.
“Markets are still quite cautious about whether the government will introduce a large-scale stimulus, because they have been reluctant to do any large-scale stimulus last year. So I think the markets are a little bit uncertain whether they will The report is genuine,” he said. CBA’s Kong.
“If that report is true and Chinese officials come out with a big stimulus package, that will obviously boost the (yuan) and currencies tied to the Chinese economy.”
The stock, which touched a nearly one-month high of 7.2700 per dollar on Tuesday, was last bought at 7.2839.