Dollar Slips as Williams Cools Rate Hike Bets
The US dollar slipped on Wednesday as New York Fed President John Williams tempered rate hike bets by saying there is no urgency to tighten policy again. This led to a recovery in risk appetite and a pullback in Treasury yields, which fell from their 19-year highs.
The yield on the 10-year Treasury note dropped about eight basis points to around 5.21%, while the yield on the 30-year bond retreated from its highest level since 2002 to around 5.55%. Despite this slight easing of inflation fears, expectations of an October rate hike plunged to less than 45% from nearly 70% prior to Williams' remarks.
The dollar was softer against a basket of currencies, while the yen continued to appreciate as Japanese officials reiterated their commitment to maintaining orderly conditions in FX markets. However, any upside surprises in the upcoming US data releases, particularly the PCE price indices, could revive bets for an October increase and bolster the greenback.