The dollar eased from recent 10-weak peaks on Tuesday as global risk appetite, hurt by a jump in U.S. government bond yields and a weakening Chinese economy, staged a rebound.
Rising U.S. Treasury yields, with benchmark 10-year yields hitting 16-year highs on Tuesday, and unease over China have boosted the dollar in recent weeks.
“What we’re seeing is a bit of a pause,” said Fiona Cincotta, senior markets analyst at City Index, in London. “We’ve had a strong rally in the dollar and there’s a cautiously optimistic mood today.”
The U.S. dollar index – which measures the currency against six developed-market counterparts, was down 0.25% at 103.06, below Friday’s 10-week highs at 103.68.
Still, it is up just over 1% so far in August.
The dollar slipped 0.3% to 145.79 yen, pulling away from last month’s nine-month peaks after Bank of Japan Governor Kazuo Ueda met with the prime minister, although he said exchange-rate volatility was not discussed.
Overall moves in the dollar were expected to be limited ahead of an upcoming speech by Federal Reserve Chair Jerome Powell at the Fed’s central bank symposium at Jackson Hole, Wyoming.
“So much depends on what Powell says about whether rates will remain higher for longer,” said Cincotta, referring to the dollar outlook.
The greenback also came under pressure against European currencies as London trade got under way.