Asian currencies steadied on Thursday after a sharp rally the previous session, while the U.S. dollar hovered near a three-month low as a bond market selloff cooled following Treasury intervention.
The Dollar Spot Index fell 0.13% to 98.80, extending declines after tumbling 0.8% in the prior session. The retreat followed a surge in global bond yields to multi-decade peaks earlier in the week, driven by escalating tensions in the Persian Gulf and rising crude oil prices. The U.S. 30-year Treasury yield reached a 19-year high of 5.337% on Tuesday before easing back toward 5.18% after Washington doubled the cap on long-end Treasury buyback operations to at least $4 billion.
The Japanese yen edged up 0.1% to 158.43 per dollar, holding most of its gains from a prior 1% rally. The South Korean won remained steadier near 1,320 per dollar following an overnight surge of 1.8%. Brent crude held firm near $92 a barrel, while the euro advanced 0.2% to its highest level since May 14, supported by sticky regional inflation and expectations of a potential European Central Bank rate hike next month.
The British pound gained 0.3%, reaching its highest level since May 11, underpinned by firm UK gilt yields. The Indian rupee also edged higher, snapping a five-session losing streak. Analysts at ING noted that the Treasury’s intervention had been "warmly greeted by investors globally," adding that while a more structural solution such as fiscal consolidation was needed for a sustainable bond market recovery, the move to increase vigilance on the long end was welcomed.
The dollar’s retreat comes as the Federal Reserve’s policy path remains a key focus, with Chair Kevin Warsh scheduled to deliver remarks at the Jackson Hole Symposium. The U.S. Treasury’s liquidity measures have temporarily eased market stress, but investors continue to monitor geopolitical risks and their impact on energy prices and bond yields.
