The US dollar and Treasury yields fell after Zions Bancorp and Western Alliance admitted to fraudulent lending to funds investing in troubled commercial mortgages. The Bloomberg Dollar Spot Index weakened 0.1% (the fourth straight day) and is heading for its worst week since July. The bond rally pushed the 2-year yield to its lowest level since September 2022, and the 5-year yield to its lowest since October 2024.
"The USD moved lower as yields fell and regional bank concerns increased," said Mahjabeen Zaman (ANZ). USD/JPY briefly fell 0.3% to 149.93, breaking below 150 for the first time since October 6, after Bank of Japan Governor Kazuo Ueda signaled further tightening could be achieved if confidence in the economic outlook strengthens. The market is also monitoring the chances of a LDP-Ishin coalition, dubbed "50:50."
In Europe, EUR/USD rose 0.2% to return above 1.17 after French PM Sebastien Lecornu survived two no-confidence motions. GBP/USD edged up 0.1% to 1.3449.
In commodity-sensitive territory, AUD/USD fell 0.3% to 0.6465 as risk sentiment worsened. According to an Asian FX trader, Aussie buying by exporters was restrained by leveraged selling in AUD/JPY. The bottom line: regional bank concerns and falling yields weighed on the dollar, while the yen and euro capitalized on the momentum.
Source: Newsmaker.id
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