Dollar sinks with bond yields after US budget deal

October 18, 2013 | 09:57

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The dollar sank together with US bond yields on Thursday after Washington politicians eased crisis fears with a deal on the budget and debt ceiling.

US dollar note (AFP/Paul J Richards)

NEW YORK CITY: The dollar sank together with US bond yields on Thursday after Washington politicians eased crisis fears with a deal on the budget and debt ceiling.

Analysts said the weeks-long crisis, which saw the government partially shut down, probably meant the Federal Reserve would keep its huge stimulus program unchanged for longer, also putting downward pressure on the greenback.

At 2100 GMT the euro was at US$1.3677, compared with US$1.3530 late Wednesday.

The dollar fell to 97.91 yen from 98.76 yen, while the euro rose to 133.92 yen from 133.61.

The end of the budget and default crisis and expectations of a delay to the Fed's taper of its US$85 billion a month quantitative easing (QE) bond purchase program sent US bonds sharply higher and yields sinking.

The 10-year Treasury yield fell to 2.59 per cent from 2.67 per cent late Wednesday, while the 30-year fell to 3.66 per cent from 3.72 per cent.

Charles Evans, president of the Chicago branch of the Fed and a member of the monetary policy committee, made clear in a speech Thursday that he did into expect the committee to begin the taper of the stimulus in the short term.

"It is not yet time to remove accommodation. The data are still not definitive enough to say that now is time to adjust the QE3 flow purchase rate," he said.

The British pound gained, rising to US$1.6162 from US$1.5945, while the dollar fell to 0.9022 Swiss franc from 0.9134 franc.

AFP

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