Dollar Hits Three-Month Peak as US Treasury Yields Surge
The US dollar has reached a three-month high after data showed that US Treasury yields have increased, driven in part by concerns about global price pressures stemming from the conflict between the US and Israel.
Data released on Thursday revealed that US inflation rose less than expected in August, while downward revisions to July's reading reduced expectations for a Federal Reserve rate hike this month. However, a surge in euro zone inflation highlighted the ongoing threat posed by higher energy prices to the global economy.
The dollar peaked at 101.66 against a basket of currencies, its highest level since June 25, extending its 2% rise in September. The euro fell 0.11% to US$1.1317 and sterling slipped 0.1% to US$1.32495 against the dollar.
Ray Attrill, head of FX strategy at National Australia Bank, noted that 'the US dollar seems to be showing more sensitivity, just at the moment, to what's happening with say, 10-year Treasuries, than it is on pricing for when the next Fed rate hike might come.' He believes that if yields continue to rise, it will be supportive of the dollar.