NEW YORK (Reuters) – The U.S. dollar would probably come under further pressure if the Federal Reserve adopts targets for U.S. Treasury yields that would limit their rise and ensure that interest rates remain near zero for some time.
FILE PHOTO: A bank employee counts US dollar notes in this file photo from May 16, 2016. REUTERS/Kham/File Photo
Capping bond yields could diminish the attractiveness of U.S. Treasury debt, as investors look to other alternatives, analysts said. That may exacerbate a downtrend in the U.S. currency that has been partly triggered by a gradual reopening of global economies following shutdowns aimed at curbing the spread of the novel coronavirus.
Since late May, the dollar has fallen about 4.2% against a basket of major currencies.
The Federal Reserve did not announce any measures to cap the rise of bond yields on Wednesday at the end of its two-day meeting. But in a press briefing, Fed Chairman Jerome Powell said the central bank would consider yield curve controls once it gets a better understanding of where the economy is headed.
New York Fed President John Williams and Fed Governor Lael Brainard had ra