Dollar falls to three-month low as Treasury moves to soothe bond jitters

Investors have been grappling this week with a sharp selloff in the global bond market on mounting concern about soaring government debt and the spectre of higher oil prices due to the lack of progress in ending the U.S.-Israeli war with Iran.

The 30-year Treasury yield US30YT=RR rose to a 19-year high of 5.337% earlier this week. It was last at 5.198% after dropping 9 basis points following the move by the Treasury that effectively shifts more of the government's borrowing toward short-term bills.

The broad dollar weakness provided some relief to the Japanese yen JPY= as the fragile currency pulled away from the closely watched 160 level. It traded at 158.41 per dollar, surrendering part of its advance from the previous session.

The yen has been in the spotlight since a rare coordinated intervention by U.S. and Japanese authorities at the end of July sought to arrest its slide after it weakened to a 40-year trough near 164 per dollar.