The United States of America Dollar, on Friday, May 18, i edged higher against the yen and set a fresh four-month high, buoyed by a further rise in U.S. Treasury yields that suggests an upbeat outlook for the world’s largest economy.
The dollar’s index against a basket of six major currencies stood at 93.570 and briefly surpassed a five-month high of 93.632 set earlier this week.
The dollar has risen 5 percent since mid-February and investors are betting that U.S. interest rates will need to rise further to curb inflation.
That has forced investors who took big positions against the dollar anticipating it would fall in 2018 to rush to unwind and cover their positions, pushing the greenback even higher.
“We continue to anticipate dollar gains,” Hans Redeker, global head of currency strategy at Morgan Stanley in London, said in a note.
The U.S. budget deficit, which is projected to balloon to more than $1 trillion in 2019, they said, would contribute to a drop of 5 percent in the dollar index over the next 12 months, Reuters reports.
