Dollar firm, yuan slips on China downgrade

PanARMENIAN.Net - The dollar held firm on Wednesday, May 24 having rebounded from 6-1/2-month lows against its major peers helped by a rise in U.S. Treasury yields, while the yuan eased after Moody's cut its sovereign rating on China due to concerns over the country's soaring debt, Reuters says.

The dollar index held steady against a basket of six currencies at 97.321 after bouncing 0.4 percent the previous day.

It managed to pull away from the 96.797 level plumbed on Monday, its lowest since Nov. 9, when concerns over U.S. politics stemming from the Trump election campaign's suspected links with Russia took a toll on the greenback.

The dollar was boosted as U.S. debt prices fell, with the benchmark 10-year Treasury note yield climbing 3 basis points overnight and putting some distance between the one-month trough reached last week in a bond-buying flight to safety.

"The rise in Treasury yields is supporting the dollar. It appears that speculative buying of Treasuries has run its course, with Trump concerns and geopolitical risks no longer fresh news," said Yukio Ishizuki, senior currency strategist at Daiwa Securities.

The dollar was firm at 111.795 yen after a bounce to 111.995 yen, its highest in a week.

The U.S. currency also managed to halt its slide against the euro, which had enjoyed a bull run this month on factors including an ebb in French political concerns, upbeat euro zone data, and a widening German-U.S. government debt yield spread.

The euro was little changed at $1.1191, nudged away from a 6-1/2-month high of $1.1268 scaled the previous day.

Investors are now turning their focus towards the Federal Reserve's monetary policy stance. Minutes of the Fed's latest policy-setting meeting are set for publication at 2 p.m. eastern time (1800 GMT) on Wednesday.

The market already expects the Fed to raise interest rates in June, but given the greenback's recent weakness, dollar bulls are expected to welcome any hawkish hints by the central bank.