The United States of America dollar, on Tuesday, April 24, held at a three-month high against a basket of currencies, after having received a boost from U.S. 10-year Treasury yields holding near the key 3 percent level.
The dollar’s index against a basket of six major peers rose to as high as 91.076 .DXY, its strongest since Jan. 12. The dollar index was last steady on the day at 90.989.
The dollar set a two-month high of 108.87 yen JPY=EBS and was holding near those levels.
Against the yen, the dollar rose 0.1 percent to 108.86 yen . On Monday, the dollar had surged nearly 1 percent on Monday for its biggest daily percentage rise in almost a month.
The U.S. 10-year Treasury yield hit its highest in over four years at 2.998 percent on Monday, driven by worries about the growing supply of government debt and inflationary pressures from rising oil prices.
The U.S. 10-year bond yield later backed off that level a bit and stood at 2.971 percent in Tuesday’s early Asian trade.
Including Monday’s move, the U.S. 10-year yield surged nearly 16 basis points in four trading sessions, the biggest four-day rise since late June last year.
The rise in Treasury yields has caused U.S.-Japan and U.S.-German yield differentials to widen in the dollar’s favour, leaving the yen and the euro lower.
“The U.S. dollar has put on a compelling show…as the stars align on the back of higher U.S. yields,” Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore, wrote in a note.
“While it’s a bit early for investors to pack in the consensus short dollar view, the weaker shorts are indeed getting pared as the U.S. dollar is showing some vigour.”
Innes added that U.S. first-quarter gross domestic product data due on Friday could be key in determining whether the dollar will extend its gains further.
The yen, a safe haven currency that tends to rise in times of economic uncertainty but weakens when investor confidence returns, has come under pressure in recent sessions as worries over geopolitical risks and global trade tensions eased.
U.S. Treasury Secretary Steven Mnuchin said on Saturday he may travel to China, a move that could ease tensions between the world’s two largest economies.
The dollar also rose against emerging market currencies on Monday, with Brazil’s currency hitting a nearly 1-1/2 year low and Mexico’s peso falling to its weakest since early March.
