FOREX-Dollar hits three-month lows amid Fed easing speculation

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Euro and pound on 3-month highs against the dollar
* Fed meets as traders eye Treasury yields
* Speculation on yield control measures

By Julien Ponthus
LONDON, June 10 (Reuters) - The dollar dropped to a
three-month low amid speculation the U.S. Federal Reserve will
announce later on Wednesday it intends to keep a 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.
Against a basket of international currencies =USD , the
dollar fell about 0.5% to 95.97, a level not seen since March
12. The euro EUR=D3 , the pound GBP=D3 and the Swiss franc
CHF=D3 all reached three-month highs against the dollar.
The euro rose as high as $1.1388, sterling reached $1.2786
and the franc $0.9449.
Dollar/yen fell to nearly a two-week low of 107.26
JPY=EBS .
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.
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.
"We do not expect yield curve control to be adopted at
tonight's meeting, but we would not be surprised if markets this
evening are left with a view that it is a policy under most
serious consideration as a strong, powerful form of forward
guidance and is likely to be introduced later in the year", MUFG
Bank analysts wrote to their clients.
In the meantime, the uncertainty about the outcome of the
Fed meeting is likely to keep the dollar under pressure.
"Anyone who wants to know what that means for the U.S.
dollar long term simply has to take a look at the JPY (yen) and
how it acts as the ultimate safe haven in times of crisis - more
so than even the dollar", Commerzbank analyst Thu Lan Nguyen
commented.
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.
The Australian and New Zealand dollars extended their recent
rally against the U.S. dollar as economic activity in both
countries resumed following the lifting of coronavirus
restrictions.
The Australian dollar AUD=D3 rose 0.69% to $0.7008, just
shy of an 11-month high. The New Zealand dollar NZD=D3 also
rose 0.7% towards its highest since late January.