Rising U.S. yields help the dollar higher

In early trade on Thursday, the dollar touched a three-week high versus the yen and held steady against other major currencies, helped by rising U.S. Treasury rates, which hit two-week highs overnight.

The dollar reached 130.23 yen, its best level since May 11, extending Wednesday’s 1.1 per cent rise and returning to its 20-year high of 131.34 set in May.

The euro was at $1.0654 after falling 0.81 per cent overnight to a 10-day low, and sterling was at $1.2485 after losing 0.96 per cent on Wednesday. The dollar index is now in the lead at 102.53.

The benchmark 10-year yield in the United States touched a two-week high of 2.951 per cent on Wednesday after statistics revealed that manufacturing activity in the United States increased in May as demand for goods remained strong, potentially easing fears of an impending recession. Job opportunities in the United States have likewise remained strong.

Yields have risen as the Federal Reserve of the United States has raised interest rates swiftly to bring raging inflation under control while avoiding a recession. In early Asia, the 10-year yield stood at 2.9145 per cent. Traders are anticipating additional U.S. employment data due later Thursday and Friday’s U.S. payroll data. They are also beginning to focus on next week’s European Central Bank (ECB) policy meeting, at which the central bank is likely to provide more specifics about its rate-hike plans.

The Australian dollar was barely changed at $0.717, while bitcoin was trading around $29,800, having dropped overnight after failing to continue its surge beyond $30,000 earlier in the week. On Thursday, the Russian rouble slipped towards 62 per cent, stabilizing in a reasonably tight range after strong and uncontrolled fluctuations last week caused by an imbalance of supply and demand on the Moscow Exchange.