Dollar Surges to Two-Month High as Treasury Yields Climb

The US dollar surged to a two-month high on Thursday as Treasury yields continued to climb, driven by expectations of further Federal Reserve interest rate hikes.

Data released on Thursday showed a sharp drop in weekly initial jobless claims, dipping by 1,000 to 197,000, below the estimated 201,000. This solid economic data reinforced the need for higher interest rates to combat inflation.

The dollar index rose 0.15% to 101.28, its highest since July 29, after hitting 101.39. Several Federal Reserve officials spoke out on Thursday, flagging the possibility of more rate increases if inflation does not moderate. New York Federal Reserve President John Williams and Philadelphia Fed President Anna Paulson noted that further hikes were likely needed.

The euro fell 0.07% to $1.1372 after falling to its lowest since July 28. The dollar strengthened against the Norwegian crown, rising 0.33% to 9.51, while the Swedish crown weakened 0.1% versus the dollar. Against the Swiss franc, the dollar rose 0.34% to 0.828.