Dollar Rises on Expectations of US Rate Hikes

The US dollar gained strength on Wednesday as traders anticipated the first of several interest rate hikes from the Federal Reserve.

Currency strategist Carol Kong at Commonwealth Bank of Australia in Sydney said a 25 basis-point increase is about 90% priced, implying the dollar will receive a modest boost if the Fed increases rates.

The dollar had advanced along with yields overnight, pushing the kiwi to a two-month low of US$0.5749 and the yen to a one-week low of 155.43 per dollar in Asian trade.

Congestion in currency markets has been due to global bond yields climbing in concert over recent weeks because sovereign bonds have moved in tandem and not shifted relative differences between countries' yields very far.