Euro Hits 16-Month Low and AUD Drops Despite RBA Hike as 30-Year Treasury Yield Surges to 5.60%

The U.S. dollar extended its advance to fresh highs on Tuesday, powered by a surge in Treasury yields that pushed the 30-year rate to 5.60%, a level not seen since 2004. The euro fell to a 16-month low, last trading down 0.26% at $1.13415, as hawkish Federal Reserve rate-hike bets continued to draw capital into dollar assets and lifted the greenback broadly.

The Australian dollar was unable to hold gains even after the Reserve Bank of Australia raised its cash rate by 25 basis points to 4.60%, in line with expectations. Markets characterized the move as a dovish hike, and fast money responded by adding to dollar long positions, with Aussie net short positioning rising to its highest since December. The Invesco CurrencyShares Australian Dollar Trust crossed below its 200-day moving average of $69.45, reflecting the four-week slide that has carried AUD/USD back toward critical longer-term trend support ahead of the quarterly close.

The Canadian dollar also slipped, pressured by weak July growth data at home compounding the broader dollar bid. Wells Fargo revised its forecasts for the dollar, yen, and euro in light of the shifting rate-hike outlook. The pound fell alongside the euro as 2004-era U.S. yields undercut risk appetite for European currencies.

Gold, which had dropped nearly 4% over the prior two sessions as high yields and the firm dollar capped any bounce, attempted a partial recovery and was last up 1.4% at $4,175.01. Silver retreated as rising U.S. yields combined with Strait of Hormuz tensions reinforced the dollar's safe-haven appeal. WTI crude settled at $89.38 per barrel. Adding to the macro backdrop, U.S. job openings fell to a five-month low and consumer confidence dropped to its lowest reading since 2014, painting a picture of a slowing but still tight labor market. Egypt and the UAE separately renewed a bilateral EGP-AED currency swap agreement worth AED 5 billion, while the Iranian rial fell to an all-time low, with $400 equating to billionaire status in local currency terms.