Dollar Stays Firm as Rate Bets Reset Above 5% Yield Threshold

The US dollar has held near its two-month high after a strong business survey and a shaky five-year Treasury auction pushed yields back above 5%.

This move has revived bets on another Federal Reserve rate hike, with implied odds now at nearly 70% on CME's FedWatch Tool.

The dollar's strength is attributed to traders' expectations that US rates will stay higher for longer, making holding dollars more attractive.

A weak five-year Treasury auction and a resilient economy, as pointed out by Federal Reserve Governor Michael Barr, have contributed to the shift in interest-rate expectations.