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Dollar drops with US yields, euro buoyed as ECB trims emergency support

NEW YORK : The dollar dipped on Thursday as Treasury yields fell after the U.S. government saw strong demand for a sale of 30-year bonds, while the euro was supported after the European Central Bank said it would trim emergency bond purchases over the coming quarter.

The greenback has largely moved in line with Treasury yields this week. Yields fell on Thursday after the Treasury completed US$120 billion in coupon-bearing supply scheduled for this week. [US/]

Against a basket of peers, the dollar is holding above a one-month low reached on Friday when jobs data for August showed that jobs growth slowed.

The dollar index dropped 0.23per cent to 92.47, up from a one-month low of 91.94 on Friday.

Investors are focused on when the Federal Reserve is likely to begin paring bond purchases as it balances rising price pressures against a still relatively soft employment picture.

Chicago Federal Reserve President Charles Evans on Thursday said the U.S. economy is "not out of the woods yet," and that despite strong economic growth and the promise of vaccines, challenges remain, including supply chain and labor market bottlenecks.

Fed Governor Michelle Bowman, meanwhile, added her voice to the growing number of policymakers who say the weak August jobs report likely won't throw off the central bank's plan to trim its US$120 billion in monthly bond purchases later this year.

Data on Thursday showed that the number of Americans filing new claims for jobless benefits fell last week to the lowest level in nearly 18 months, offering more evidence that job growth was being hindered by labor shortages rather than cooling demand for workers.

The euro was also supported after the ECB maintained a dovish tone and offered no major surprises as it took a first small step toward unwinding the emergency aid that has propped up the euro zone economy during the pandemic.

In the past two quarters, the bank has purchased around 80 billion euros worth of debt each month. It provided no numerical guidance for the three months ahead, but analysts had predicted before the meeting that purchases would fall to between 60 billion and 70 billion euros in those months.

“The ECB is delivering mainly as expected today,” analysts at TD Securities said in a report. “Looking ahead, the focus will be on how the ECB defines "moderately" - anything less than €60bn/mo could be bearish.”

The euro gained 0.11per cent on the day to US$1.1828.

Bitcoin edged higher it attempted to recover from a large and sudden price drop on Tuesday.

The cryptocurrency gained 1.28per cent to US$46,680.


Currency bid prices at 3:30PM (1930 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change


Dollar index 92.4830 92.7030 -0.23per cent 2.781per cent +92.7620 +92.3780

Euro/Dollar US$1.1828 US$1.1816 +0.11per cent -3.19per cent +US$1.1842 +US$1.1805

Dollar/Yen 109.7000 110.2100 -0.45per cent +6.22per cent +110.2650 +109.6350

Euro/Yen 129.75 130.28 -0.41per cent +2.23per cent +130.3200 +129.6800

Dollar/Swiss 0.9169 0.9220 -0.53per cent +3.66per cent +0.9223 +0.9162

Sterling/Dollar US$1.3840 US$1.3771 +0.52per cent +1.32per cent +US$1.3863 +US$1.3755

Dollar/Canadian 1.2653 1.2694 -0.35per cent -0.66per cent +1.2727 +1.2623

Aussie/Dollar US$0.7371 US$0.7365 +0.10per cent -4.17per cent +US$0.7394 +US$0.7347

Euro/Swiss 1.0845 1.0893 -0.44per cent +0.35per cent +1.0897 +1.0845

Euro/Sterling 0.8545 0.8579 -0.40per cent -4.39per cent +0.8588 +0.8524

NZ US$0.7112 US$0.7102 +0.17per cent -0.94per cent +US$0.7133 +US$0.7084


Dollar/Norway 8.6780 8.7130 -0.40per cent +1.06per cent +8.7245 +8.6615

Euro/Norway 10.2650 10.2925 -0.27per cent -1.93per cent +10.3135 +10.2280

Dollar/Sweden 8.6083 8.6273 -0.17per cent +5.03per cent +8.6435 +8.5866

Euro/Sweden 10.1816 10.1994 -0.17per cent +1.04per cent +10.2135 +10.1640

(Reporting by Karen Brettell; Editing by Philippa Fletcher and Jonathan Oatis)

Source: Reuters


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