The dollar was under pressure on Wednesday following comments from Federal Reserve Chair Jerome Powell that led to lower U.S. bond yields, despite a strong domestic jobs report. The euro remained strong due to high local inflation, while the pound stayed steady ahead of the U.K. election. The yen continued to struggle near a 38-year low against the dollar, as the possibility of a second term for President Trump raised concerns about higher Treasury yields.
The dollar index was relatively unchanged at 105.66, with the euro flat at $1.0749 and sterling holding at $1.2689. The yen was at 161.54 per dollar, close to its lowest level since December 1986. Traders were on alert for potential Japanese intervention in the currency markets, following previous efforts to stabilize the yen.
Concerns about a potential Trump presidency led to higher long-term Treasury yields, but yields have eased recently. Fed Chair Powell noted progress on inflation, but emphasized the need for more data before considering interest rate cuts. The 10-year Treasury yield was at 4.4336% in Tokyo.
The possibility of a Trump presidency has shifted expectations for the USD/JPY exchange rate, with analysts predicting higher fiscal deficits, inflation, and yields. U.S. data showed an increase in job openings, while euro zone inflation remained a concern. The Australian dollar rose on better-than-expected retail sales data, while the Chinese yuan hovered near its weakest level in months amid signs of tolerance for its decline.