Dollar Hits 17-Month High as Global Bond Yields Surge

The US dollar has reached a 17-month high as global bond yields surge and concerns over inflation persist. The greenback's value is up about 1% for the week, which would mark its third consecutive weekly gain if sustained.

The recent rise in longer-term yields, despite reduced expectations of an immediate Federal Reserve rate increase, indicates that investors are increasingly concerned about term premiums and fiscal risks rather than simply focusing on the central bank's next policy decision.

Markets were shaken on Thursday after a broad decline in government bonds pushed the yield on the benchmark US 10-year Treasury to 5.344%, its highest level since 2002. The yield later eased to 5.249% in early Friday trading as bond markets showed signs of stabilising.

The euro remains under pressure at $1.1237, close to its weakest level since May 2025. Concerns over France's fiscal position have weighed heavily on the common currency, while rising European borrowing costs have added to investor uncertainty.