The U.S. dollar weakened against major currencies, pressured by a significant rally in the Japanese yen following a government bond auction that saw unprecedented investor demand. The euro also found some stability amid ongoing political concerns in France.
The British pound and euro gained against a consolidating U.S. dollar, but analysts caution that persistent risks from high energy prices and fiscal uncertainty in France could limit further upside.
The U.S. dollar stabilized near a three-week trough on Wednesday, as falling U.S. Treasury yields capped its upside despite safe-haven demand from Middle East tensions. The euro was pressured by French political turmoil, while the yen held steady with traders on alert for potential intervention.
U.S. Treasury yields declined for a second day as concerns over AI stock valuations prompted a flight to safety. Meanwhile, French government bond yields surged past 5% for the first time since 2002 amid escalating political and fiscal turmoil.
The British pound strengthened against a broadly weaker U.S. dollar after UK inflation data for September surpassed forecasts, bolstering expectations for a Bank of England interest rate increase in November.
The Japanese yen strengthened to its strongest level in three weeks on Thursday, capitalizing on a broad-based U.S. dollar decline as traders position for a series of major central bank policy meetings next week.
The yield on India's benchmark 10-year government bond climbed to its highest point since March 2023, following a move by the central bank to reject all bids at a Treasury bill auction.
U.S. government bond yields declined across the curve, with the 10-year rate hitting a one-month low, as investors sought haven assets amid a deepening fiscal and political crisis in France.
The U.S. dollar weakened on Thursday as a pullback in technology stocks and lower Treasury yields prompted investors to unwind bullish positions, providing a lift to the British pound.
