Dollar Retreats from 10-Week Highs Amidst Global Economic Concerns

In a notable shift, the US dollar took a step back from its recent 10-week peak on Tuesday as a renewed wave of global risk appetite prompted a rebound in the financial markets. This recovery comes on the heels of a sharp increase in US government bond yields and growing anxieties about the trajectory of China’s economy.

According to Reuters, the surge in benchmark 10-year US Treasury yields, which hit their highest levels in 16 years, has provided strong support to the dollar over the past few weeks. Additionally, the escalating concerns surrounding China’s economic outlook further bolstered the dollar’s appeal.

However, the latest figures show that the US dollar index, a key measure of the dollar’s strength against six major developed-market currencies, remains at a neutral level of 103.32. This comes after the index reached a 10-week high of 103.68 just last Friday. Nevertheless, it’s worth noting that the dollar has managed to secure a modest gain of just over 1.4% in August so far.

In trading against the Japanese yen, the dollar slipped by 0.28%, landing at 145.79 yen. This slight retreat follows its upward surge to a nine-month high of 146.56 last week. Interestingly, the recent meeting between Bank of Japan Governor Kazuo Ueda and the prime minister did not yield any explicit discussions on exchange-rate volatility.

All Eyes on Fed Chair’s Speech this Week for Clues on the Dollar

All eyes are now fixed on Federal Reserve Chair Jerome Powell’s imminent address at the prestigious Jackson Hole symposium in Wyoming. With his insights expected to provide guidance on the potential duration of prevailing interest rates, analysts predict that the dollar’s movement will be somewhat subdued until Powell’s speech unfolds.

Turning to the European front, the dollar faced a resistant stance against major European currencies as the London trading session commenced. Despite this, the EUR/USD pair remained at a neutral level as of the time of writing.