Dollar retreats from 18-month high as Treasury yields slide

The US dollar fell back from an 18-month high on Oct 15 as a slide in Treasury yields pressured the currency and Federal Reserve officials played down the chance of a rate increase in October, Reuters reported via The Business Times.

The dollar index, which tracks the currency against a group of rivals, was down 0.2% at 102.03 after peaking on Oct 14 on an inflation reading that came in above forecasts. The euro gained 0.5% to $1.1216 and sterling rose 0.5% to $1.3253. The Australian dollar slipped 0.7% to $0.6919 after a surprise drop in September employment, while the yen firmed to 157.80 per dollar.

Buying of government debt, driven in part by renewed concern over borrowing by artificial intelligence companies, sent the 10-year Treasury yield to 5.085% and the 30-year to 5.428%, both near three-week lows.

Odds of an increase at the Oct 27-28 Fed meeting climbed to 50% after the consumer price data before central bank officials said they could wait for clearer evidence. Kit Juckes, chief FX strategist at Societe Generale, said he expected trading to stay "choppy and uncomfortable" until retail sales and producer price figures were published.

Fed Chair Kevin Warsh was scheduled to speak at IMF-World Bank meetings in Bangkok on Oct 16.

This story was first reported by The Business Times.