* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Euro and pound at 3-month highs against the dollar
* Fed meets as traders eye Treasury yields
* Speculation on yield control measures
(Adds new comment, FX table, U.S. data, updates prices, changes byline, dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, June 10 (Reuters) - The dollar dropped to a three-month low on Wednesday as speculation
increased that the U.S. Federal Reserve will announce later in the session it intends to keep the recent
rise in bond yields in check.
Concern about possible measures or even a simple statement of intent by the Fed to hold down the
yields of U.S. government bonds has kept the U.S. currency under pressure.
Some investors believe the Fed, which is not expected to change its interest rate policy, may decide
either today or at a later date to adopt yield-curve control measures to guide 10-year Treasury yields
lower.
"The Fed is definitely considering it. They will definitely say they are considering all options to
meet their objectives," said John Floyd, principal portfolio manager for the dynamic macro currency
strategy at Record Currency Management in New York.
"But I don't think they will announce explicit targets. There is really no incentive to do that as the
economy is just reopening and the U.S. employment data is stronger than expected," he added.
Earlier this month, hopes that the U.S. economy would recover faster than expected had pushed yields
of U.S. government bonds to their highest level in nearly three months and strengthened the dollar.
In mid-morning trading, the dollar fell about 0.4% against a basket of major currencies to 96.061
=USD , after earlier sliding to 95.973 a level not seen since March 12.
The euro EUR=EBS , the pound GBP=D3 and the Swiss franc CHF=EBS all reached three-month highs
against the dollar.
The euro rose as high as $1.1389, sterling reached $1.2803 and the Swiss franc $0.9514.
The dollar also fell against the yen to a two-week low of 107.26 JPY=EBS , and was last down 0.4% at
107.32 yen.
The greenback though reacted little after data showed U.S. consumer prices fell for a third straight
month in May, with the index dipping 0.1% after plunging 0.8% in April. In the meantime, the uncertainty about the outcome of the Fed meeting is likely to keep the dollar
under pressure.
U.S. central bankers on Wednesday will also publish their first economic projections since the
coronavirus pandemic plunged the country into recession. Estimates are expected to signal a collapse in output this year and near-zero interest rates for the
next few years.
In other currencies, the Australian and New Zealand dollars resumed their recent rally against the
U.S. dollar, as economic activity in both countries was restored following the lifting of coronavirus
restrictions.
The Australian dollar AUD=D3 rose 0.5% to US$0.6996, not far from an 11-month high. The New Zealand
dollar NZD=D3 also rose 0.3% to US$0.6532.
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Currency bid prices at 9:47AM (1347 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1361 $1.1340 +0.19% +1.35% +1.1389 +1.1332
Dollar/Yen JPY= 107.2800 107.7200 -0.41% -1.45% +107.8700 +107.2700
Euro/Yen EURJPY= 121.89 122.15 -0.21% -0.05% +122.3600 +121.8100
Dollar/Swiss CHF= 0.9456 0.9506 -0.53% -2.29% +0.9514 +0.9451
Sterling/Dollar GBP= 1.2743 1.2729 +0.11% -3.89% +1.2800 +1.2707
Dollar/Canadian CAD= 1.3408 1.3414 -0.04% +3.25% +1.3428 +1.3370
Australian/Doll AUD= 0.6998 0.6961 +0.53% -0.33% +0.7019 +0.6933
ar
Euro/Swiss EURCHF= 1.0744 1.0781 -0.34% -1.00% +1.0790 +1.0744
Euro/Sterling EURGBP= 0.8913 0.8908 +0.06% +5.43% +0.8920 +0.8884
NZ NZD= 0.6531 0.6512 +0.29% -3.04% +0.6560 +0.6496
Dollar/Dollar
Dollar/Norway NOK= 9.3231 9.2639 +0.64% +6.20% +9.3262 +9.2000
Euro/Norway EURNOK= 10.5958 10.5180 +0.74% +7.70% +10.6030 +10.4550
Dollar/Sweden SEK= 9.2295 9.1716 +0.46% -1.26% +9.2304 +9.1601
Euro/Sweden EURSEK= 10.4867 10.4382 +0.46% +0.17% +10.4915 +10.4096