The U.S. dollar was pinned near a three-month low on Thursday after the Treasury Department moved to calm a bond market selloff that had pushed long-end yields to their highest since 2007, lifting risk sentiment and undercutting the currency. The dollar index, which measures the dollar against six other currencies, fell to 98.558, its lowest level since May 14. The euro rose to $1.1710, the highest level since mid-May. ING global head of markets Chris Turner said the Treasury's move to increase buybacks of Treasury securities with maturities between 10 and 30 years should reassure markets that longer-dated bonds are unlikely to face a disorderly selloff.
"It reduces one of those left-field risks out there which is good for risk, good for the investment environment and slightly dollar negative," Turner said. Investors have been grappling this week with a sharp selloff in the global bond market on mounting concern about soaring government debt and the spectre of higher oil prices due to the lack of progress in ending the U.S.-Israeli war with Iran.
