The dollar rose for a second day versus the yen, hitting a new two-decade high, as concerns about rising inflation increased Treasury yields while Asian shares fell, both benefiting the US currency.
Meanwhile, the Australian dollar fell 0.76 percent following the Reserve Bank of Australia’s surprise half-percentage-point interest rate hike. The Australian dollar was last trading at $0.7177, down 0.24 percent. The New Zealand dollar depreciated by 0.76 percent to $0.64435. The greenback soared 0.77% to 132.915 yen, and earlier reached 133.00, a level not seen since April 2002. The yen is very sensitive to 10-year Treasury yields, which surged to 3.064 percent in Tokyo trading.
This is the story of broad-based dollar strength and Aussie has also fallen victim to that- currency strategist. Strong U.S. jobs data at the end of last week have fuelled bets that upward price pressures will be around for longer, potentially forcing more aggressive action from the U.S. Federal Reserve. Consumer price figures due Friday will provide more clues on the Fed’s rate-hiking path, ahead of next week’s policy decision, where a half-point increase is widely expected.
The dollar index – which measures the currency against six major peers – rose 0.29% to 102.76, extending Monday’s 0.26% advance. The euro fell 0.21 percent to $1.0674 ahead of the European Central Bank’s rate-setting meeting on Thursday. Sterling dropped 0.67% to $1.2445, undoing all of the previous session’s 0.29% gain and then some. Prime Minister Boris Johnson survived a vote of confidence on Monday but was left weakened.
As risk sentiment dropped with drops in most Asian stock markets on Tuesday, bitcoin fell 5.9% to$29,501.57. Wiping out Monday’s 4.89 percent gain and putting it well below the key $30,000 level.
-Financialpost.