Dollar Index Recovers Amid Higher T-Note Yields and Weaker Yen

The dollar index DXY rose by +0.06% on Wednesday, recovering from its lowest point in two and a half weeks. The increase was partly due to higher T-note yields, which reached a 2.75-year high of 4.85%. This strengthened the dollar's interest rate differentials.

The US Treasury announced it would purchase $6 billion of long-term US government debt securities on Thursday, below expectations of $10 billion. Short covering emerged in the dollar after this announcement.

WTI crude oil surged +3% to a 3.25-month high, boosting inflation expectations and potentially prompting the Fed to tighten monetary policy. The yen rose in tandem with oil prices but fell back later due to negative effects on Japan's economy and currency.