Dollar Retreats After Hitting Fresh 2-decade High

(RTTNews) - After rising to a new two-decade high in the Asian session, the U.S. dollar retreated on Wednesday, after the Bank of England decided to intervene in the bond market by purchasing long-dated U.K. government bonds to address dysfunction in the gilt market.

The dollar moved higher earlier in the day as the White House Economic Adviser Brian Deese remarked that a global accord to adjust the value of the U.S. currency is unlikely to happen for the time being.

Deese said that the strength of the dollar is due to the strength of the economy and a highly uncertain economic outlook.

The yield on the 10-year U.S. treasury note rose as well, touching 3.982%, the highest level since 2010.

However, the greenback drifted down and bond yields dropped as the day progressed.

The BoE's move comes as bond yields in the U.K. market spiked after the government revealed its mini-budget including unfunded tax cuts.

The BoE said the purchases would be carried out on "whatever scale is necessary" to restore orderly market conditions.

In addition, the BoE postponed the selling of bonds held under the quantitative easing program to October 31. The sale was initially due to commence next week.

The dollar index, which surged to 114.78 in the Asian session, dropped to 112.59 this afternoon, and was last seen at 112.779, down 1.17% from the previous close.

The yield on the benchmark ten-year note dropped by 22.9 basis points to 3.735%.

Against the Euro, the dollar fell to $0.9736.

The dollar dropped to $1.0881 against Pound Sterling, losing about 1.4%.

Against the Japanese currency, the dollar weakened to 144.10 yen from 144.81 yen.

The dollar drifted down against the Aussie, and was last seen hovering around 0.6520, down sharply from the previous close of 0.6434 a unit of the Australian currency.

Against Swiss franc the dollar is trading at CHF 0.9760, well off the previous close of CHF 0.9918.

The Loonie is firm as well against the dollar, trading at C$1.3624 compared to C$1.2726, Tuesday's closing mark.