Benchmark 10-year U.S. bond yields resumed their rally as investors held onto expectations the Federal Reserve would continue to hike rates aggressively to curb rising inflation, boosting demand for the greenback.
The US central bank is expected to raise rates another 75 basis points when it meets on November 1-2, and there is also likely to be a further 50-75 basis point hike in December.
“It’s still too early to try to weaken the dollar,” said Mazen Issa of TD Securities. The greenback is likely to continue to gain ground until the underlying inflation momentum moderates and the Fed adopts a less aggressive stance, and “neither is likely in the short term”.
The dollar index, which compares the currency against a basket of six leading currencies, gained 0.73% to 112.76 units. The euro sank 0.8% to $0.9782.
The pound sterling fell 0.61% to $1.1249, after news that annual consumer price inflation in the United Kingdom rose to 10.1% in September, which is a higher than expected rise and the back to a 40-year high reached in July.
The dollar was up 0.32% at 149.71 yen. Traders are on the lookout for the Ministry of Finance and the Central Bank of Japan to intervene in the market again as the psychological barrier of 150 approaches. Breaking above 145 a month ago triggered the first yen-buying intervention since 1998 to prop up the currency.
Source: Ambito
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