Dollar holds near two-month peak as yields rise, Fed data looms
TLT•The dollar hovered near a two-month high as volatile oil prices and rising Treasury yields provided support, while traders awaited US inflation and payrolls data. Markets priced in more than a 70% chance of a Federal Reserve rate hike at the end of October, up from 57% a week earlier.
1. Dollar and yields rise
The dollar index was slightly higher at 101.2 and on track for a 1.8% gain this month, its best performance since June. The 10-year Treasury yield reached its highest level since 2007, the 30-year yield its highest since 2004, and the two-year yield its highest in more than two years, nearing 5%.
2. Data in focus
Investors awaited the PCE price index on Wednesday and nonfarm payrolls on Friday, both expected to support the case for further Fed rate hikes. Joseph Capurso of Commonwealth Bank of Australia said stronger US data could lift US interest rates relative to other countries and support the dollar.
3. Other currencies
The euro traded near a three-month low at $1.1367, while sterling was steady at $1.3248. The yen weakened to 157.40 per dollar as traders watched for possible intervention, and the Australian dollar and New Zealand dollar each fell 0.1%.
