Dollar, Yen Up as U.S. Bond Yields Hit Three-Month High

By Gina Lee

Investing.com – The greenback was up on Tuesday morning in Asia, with the yen buying and selling close to an virtually three-month low to the greenback, with rising U.S. bond yields attracting Japanese traders.

The that tracks the dollar in opposition to a basket of different currencies inched up 0.07% to 93.448 by 11:54 PM ET (3:54 AM GMT).

The pair was up 0.21% to 111.23, climbing above the 111.07 mark hit on Monday, a stage not touched since Jul. 5.

The pair edged up 0.19% to 0.7299, with information launched earlier within the day confirmed that Australian contracted 1.7% month-on-month in August. The pair inched up 0.01% to 0.7017.

The pair inched down 0.02% to six.4545 whereas the pair inched up 0.07% to 1.3704.

The benchmark 10-year U.S. yield briefly topped 1.5% on Monday, a stage not seen since June 2021, and the two-year yield rose to its highest since March 2020. This attracted traders from Japan, with 10-year Japanese authorities bond yields remaining close to zero because of the Financial institution of Japan’s yield curve management coverage.

“The principle impression of upper Treasury yields on currencies has been to see USD/JPY make additional upward progress, now banging in opposition to 111,” Nationwide Australia Financial institution (OTC:) head of FX technique Ray Attrill mentioned in a notice.

“111 can be a troublesome (nut) to crack, taking into consideration the pair has spent solely two days with time above this stage thus far in 2021, and with having been as excessive as 1.77%,” the notice added.

The climb in U.S. yield was attributable to the U.S. Federal Reserve’s extra hawkish stance in its handed down in the course of the earlier week. The central financial institution might start asset tapering as quickly as November 2021 and hike rates of interest before anticipated.

Some traders predicted an upward development for the greenback might proceed over time.

“As a lot as asset tapering in and of itself shouldn’t be a shock, an earlier finish to its program will reinforce that draw back dangers to the greenback have diminished,” TD Securities senior FX strategist Mazen Issa mentioned in a notice.

“If the final tapering cycle was any indication, about half of the greenback’s cyclical upswing was noticed three months afterward,” the notice added, with TD anticipating the Fed to finish its quantitative easing program by June 2022.