The U.S. dollar held largely steady on Wednesday, recovering some losses after a global sell-off in long-dated bonds weighed on other major currencies.
Heightened concerns over fiscal health in countries ranging from the U.S. to Japan contributed to a rise in longer-term bond yields, which generally move inversely to prices.
The increase in yields has begun to ease, with long-dated European bonds showing signs of stabilization, although yields in Germany and France remain near multi-year highs. Japanese government bonds also reached record levels.
By 04:52 ET (08:52 GMT), the U.S. dollar index, which measures the greenback against a basket of currencies, was largely unchanged at 98.36.
The pound was steady at $1.3392 after falling to a three-and-a-half-week low in the previous session, while the euro inched up 0.1% to $1.1656. The dollar also rose slightly against the yen to 148.65, despite strong August data showing above-average growth in both Japanese manufacturing and services. Earlier this week, the dollar reached its highest level against the yen since August 1.
Traders remain cautious in Asia as uncertainty persists over a legal challenge to U.S. President Donald Trump’s wide-ranging tariffs, which could force Washington to revisit recent trade agreements.
“Yesterday’s dollar rally lacked a clear catalyst beyond the selloff in global long-dated bonds,” analysts at ING said in a note to clients. “Still, we doubt this will provide sustainable support to the dollar ahead of key data releases and imminent Fed easing.”
Market participants are closely monitoring a series of economic reports this week, including the crucial U.S. nonfarm payrolls release for August on Friday. Alongside surveys of job openings and private sector hiring, these indicators will be among the last snapshots for Federal Reserve officials before their policy meeting on September 16-17.
Analysts note that Fed Chair Jerome Powell appears focused on supporting the labor market over inflation concerns, strengthening expectations that the central bank may cut interest rates at the upcoming meeting.
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