SINGAPORE (Reuters) – The dollar traded near a 3-1/2-month high against a basket of currencies on Thursday, bolstered by higher U.S. Treasury yields, led by the 10-year benchmark breaching the 3 percent threshold this week for the first time in four years.
The 10-year U.S. Treasury yield set a fresh four-year high of 3.035 percent on Wednesday, driven by worries about the growing supply of government debt and inflationary pressures from rising oil prices.
Rise - Levels - Percent - US - Benchmark
A rise to levels beyond 3.041 percent would take the U.S. benchmark 10-year yield to its highest since July 2011. The recent jump in U.S. bond yields has caused U.S.-Japan and U.S.-German yield differentials to widen further in the dollar’s favor, leaving the yen and the euro lower.
“Unless there is a very unlikely massive meltdown in U.S. equity markets, it is doubtful the Fed will waver on a June rate hike,” Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore wrote in a note.
Equity - Market - Sentiment - Firm - Face
“With equity market sentiment holding firm in the face of rising bond yields, the almighty dollar could move through G-10 currency markets like a wrecking ball,” Innes added.
The dollar’s index against a basket of six major currencies was at 91.136 , having risen to a high of 91.261 on Wednesday, its strongest since Jan. 12.
Wall - Street - Territory - Wednesday - Optimism
Wall Street limped into positive territory on Wednesday on optimism over a spate of upbeat earnings, although that was nearly offset by jitters over rising U.S. bond yields and corporate costs.
The euro rose 0.2 percent to $1.2179 but was still within sight of a...
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