TOKYO (Reuters) – The U.S. dollar held near a 3 1/2-month high against its rivals Tuesday as bond yields were higher and expectations of faster economic normalization from the pandemic in the United States boosted in U.S. currency.
The dollar index against six major currencies rose 0.1% to 92.469, the highest level since the end of November, building on its 0.5% gains on Monday.
Against the yen, the dollar rose to 109.19 yen, the highest level in nine months, and the euro slipped to $ 1.18355, the last low seen at the end of November.
The Swiss safecard moved to 0.9369 per dollar, the lowest level since the end of July, while the British pound fell to $ 1.3818, after a three – week rub of $ 1.3779 overnight.
“Rising US bond yields are clearly driving the dollar but what is behind them is that the U.S. vaccination program is progressing very fast and that U.S. economic normalization could happen sooner. what people expected, perhaps by a quarter or two, ”said Yukio Ishizuki, senior strategy expert at Daiwa Securities.
The U.S. Centers for Disease Control and Prevention (CDC) said vaccinated people could meet without masks inside in small groups with others included.
The recommendations come as around 30 million people, or 9.2% of the U.S. population, have been vaccinated.
“That will also lead to the question of whether the Fed can maintain its projections that it will not raise rates until 2023. Some policymakers may change their mind at their policy meeting next week,” said Ishizuki.
The Federal Reserve will release its new projections when it concludes its two-day policy meeting on March 17th.
U.S. 10-year bond yields stood near a one-year high on Friday as investors held the price in more positive expectations for the U.S. economy as well as higher inflation. [US/]
Traders are wary that yields could rise later this week as the auction market has to dig up $ 120 billion of 3-, 10-, and 30-year-old treasures, especially after the UK’s soft auction. last week and sold a terrible 7-year note that saw its spike in yield.
Higher U.S. yields have begun to weaken emerging market currencies, which had attracted investor money fleeing rock-bottom bond yields in the United States.
MSCI’s market currency index fell to a three-month low after falling 0.82% on Monday, the biggest drop in about a year, with high-yielding currencies hit hard.
The Brazilian real fell to a ten-month low while the Turkish lira fell nearly 3% to its lowest level since mid-December.
Elsewhere, gold slipped to a nine-month high on Monday.
Reciting with Hideyuki Sano. Edited by Gerry Doyle