U.S Treasury 7-Year Auction Yield Up as Dollar Trades Mixed
The U.S Treasury’s 7-year auction hit a high yield of 1.461% Thursday, up from the 1.332% high in the previous auction as the dollar traded mixed against major currencies.
Market data shows that the bid to cover ratio was 2.25, little changed from the 2.24 ratio in the previous auction. Dealers represented 56.7% of the bids, with direct bidders at 12.67% and indirect bidders at 30.63%.
For takedown, bidders took 16.57%, with direct bidders at 19.54% and indirect being awarded 63.89%.
The US dollar was trading mixed versus its major trading partners early Thursday ahead of another full data schedule that includes weekly initial jobless claims and the first look at Q3 gross domestic product.
The Federal Reserve remains in its quiet period ahead of the Nov. 1-2 Federal Open Market Committee meeting, where the Fed is expected to follow the Bank of Canada’s lead and taper its asset purchases.
Until then, it appears the dollar is in a holding pattern against other major currencies.
A quick summary of foreign exchange action heading into Thursday shows that USD-CAD is holding in a tight range at 1.236, virtually unchanged from the Wednesday US close, though still below the 1.2427 level seen just prior to the hawkish Bank of Canada announcement Wednesday morning.
The BOC ended its bond-buying program and shifted into reinvestment mode, while also suggesting that a rate increase could come earlier than expected.
USD-JPY declined further to 113.5617 from 113.8101 at the Wednesday US close, slightly below the 113.7319 level a day ago but well below the 114 level that prevailed through most of last week.
The Bank of Japan made no changes to its monetary policy at this meeting Thursday and trimmed its economic forecasts, which may have attracted some risk-averse bids to the yen.
EUR-USD was virtually unchanged at 1.1607 from the Wednesday US close and up only modestly from the 1.1597 level a day earlier.
No policy changes are expected at Thursday’s European Central Bank meeting, keeping the central bank behind the monetary policy stance of the Bank of England and the expected actions of the Fed, which both meet next week.
Inflation pressures that stem from energy prices are expected to be alleviated by an increase in natural gas supplies soon. GBP-USD ticked up to 1.3751 from 1.374 at the Wednesday US close and stands above the 1.3721 level a day ago.
A favourable UK fiscal budget announcement Wednesday, with a mix of targeted tax cuts and spending increases, is expected to give the green light to the Bank of England to begin rate increases, perhaps as early as next week’s meeting. #U.S Treasury 7-Year Auction Yield Up as Dollar Trades Mixed
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