Dollar Holds Firm Near Two-Month Peak as Yields and Oil Prices Surge
The US dollar held steady near a two-month high on Tuesday as Treasury yields rose and oil prices rebounded. The euro traded near its weakest level in three months at $1.1367 after European Central Bank chief signals measured steps to combat inflation. Sterling was flat at $1.3248, also near a three-month trough.
The dollar index, which measures the US currency against a basket of peers, rose to 101.2 and is on track for a 1.8% advance this month, its best performance since June. The strong dollar was partly driven by renewed efforts to end the Iran war, with Brent crude futures last trading near $106 a barrel.
US Treasury yields have been rising rapidly, with the 10-year benchmark hitting its highest level since 2007 and the 30-year at its highest since 2004. The monetary policy-sensitive two-year yield also rose to its highest in over two years, closing in on 5%.
However, investors are awaiting US data later this week, including the PCE price index on Wednesday and nonfarm payrolls on Friday, which could provide clues on the Federal Reserve's rate path. According to CME Group's FedWatch tool, markets now see a more than 70% chance of a rate hike from the Federal Reserve at the end of October.