The dollar weakened rapidly in the New York market, with USD/JPY briefly approaching a break below ¥158. The move was prompted by the U.S. Treasury's announcement that it would expand its long-term Treasury purchase operations. The release of the FOMC minutes in the afternoon also drew market attention.
The dollar weakened rapidly in today's New York foreign exchange market, with USD/JPY briefly showing signs of falling below ¥158. The pair had traded from the upper ¥159 range to around ¥160 through the previous day, but a sharp decline then became pronounced.
The U.S. Treasury announced that it would expand the size of its long-term Treasury purchase operations. The purchases will target bonds with 10- to 30-year remaining maturities, and the Treasury indicated that it plans to raise the current cap from at least $2 billion to $4 billion. Long-term yields fell as a result.
The minutes of the FOMC meeting held in July were released in the afternoon, with many participants taking the view that further tightening would be necessary if inflation did not continue to slow. Some participants also pointed out that the pass-through of inflation into prices was now largely complete, but views on the monetary policy outlook differed overall.
EUR/USD moved above its 200-day moving average, driving further euro gains. GBP/USD briefly rose into the 1.36 range, while GBP/JPY was at times bought back to the mid-¥215 range. The UK's July CPI growth accelerated from the previous month despite coming in below expectations, and some observers said expectations for a Bank of England rate hike were not increasing.