Dollar Index Reaches Nearly 1.5-Year High on Strong Interest Rates

The US dollar index DXY reached a nearly 1.5-year high on Thursday, increasing by +0.64%. This rally was driven by strong interest rate differentials after the 10-year T-note yield rose to a 24-year high of 5.34%.

Additionally, signs of strength in the US labor market are hawkish for Fed policy and supportive of the dollar. Weekly jobless claims fell to a 10-week low of 197,000, while continuing unemployment claims dropped to a 3.5-year low of 1.701 million.

The increase in WTI crude oil prices by +2% also contributed to the dollar's gain, as it raises inflation expectations and could prompt the Fed to tighten monetary policy.