Dollar set for weekly gains as yields surge, Fed bets build

Business Recorder reported that the US dollar was set for a second straight weekly gain on Friday, as rising Treasury yields and bets on further Federal Reserve tightening kept it near recent peaks. The euro dropped to $1.1370, a two-month low, as the greenback strengthened, and was heading for a third weekly decline. Sterling held near $1.3220, close to a three-month low, and was on course for its weakest week in four months.

Last week the Fed made policy tighter, and markets have since moved to price in more increases, helped by solid economic data and fresh energy supply concerns. A selloff in government debt lifted long-dated Treasury yields to levels unseen in over two decades, which also lent the greenback extra support. This week the dollar index gained over 1%, touching its highest point in two months, before easing to 101.2 as momentum waned.

ANZ's Khoon Goh said lingering worries about the US fiscal position and unpredictable policymaking are limiting the currency's advance, even as yields keep rising. The yen hovered near 158.8 per dollar, a three-week low, as traders viewed the Bank of Japan's latest tightening and guidance as insufficiently hawkish. Goldman Sachs lowered its year-ahead USD/JPY projection to 150, down from 165.