The dollar was slightly higher than the yen on Thursday. This followed comments made by China’s forex regulator which eased concerns regarding China possibly lessening its U.S. government bonds buying.
The dollar was up by 0.2 percent to 111.70 yen, pulling back from its six-week low of 111.27 yen on Wednesday.
The euro was steady at $1.1951 on Thursday, retreating from its Wednesday intraday high of $1.20185,
The Canadian dollar was little changed from Wednesday’s C$1.2583, its lowest rate since late December, to C$1.2549 per U.S. Dollar.
Another currency that rose was the Australian dollar, up 0.5 percent to $0.7880 on the last trade of the day.
The U.S. Treasury Bonds
According to China’s foreign exchange regulator, a recent report could be based on incorrect information. The report stated that China was considering slowing down or halting its purchase of U.S. Treasury bonds. The report also claimed that Chinese officials who reviewed the country’s forex holdings were the ones that made the recommendation.
Due to the report, U.S. 10-year Treasury yields climbed to 10-month highs as dollar plummeted. But the dollar and U.S. Treasuries gained buying support after the comments from the regulator.
The U.S. dollar index is used to measure the greenback’s strength against a trade-weighted basket of six international major currencies. The index showed that the dollar rose 0.1 percent to 92.396 after falling to as low as 91.992 on Wednesday.
Despite this, there are still analysts that remained skeptical regarding the near-term outlook of the dollar.
Currency strategist Masashi Murata observed that market sentiment has been tilted towards the dollar’s downside.
“Market reaction to dollar-buying factors has been subdued, while market reactions to dollar-selling, and yen-buying factors, have been more vivid,” Murata stated.
The dollar dropped more than 1.1 percent against yen so far this week alone. Another factor that affected the dollar’s performance was the pressure from the Bank of Japan after it trimmed its buying of long-dated Japanese government bonds in Tuesday’s market operations.
Based on the BOJ operations, speculations came up saying that the BOJ might be ready to start rolling down stimulus due to the boost in yen.
Worries were put at ease on Thursday as BOJ bought its usual amount of debt.