Dollar holds near two-month peak as yields rise, Fed data looms

Business Recorder reported that the dollar held close to a two-month peak on Tuesday, helped by volatile oil prices and a rapid rise in US Treasury yields. Gains stayed modest as traders waited for this week's US data, which could signal the direction of Federal Reserve interest rates. The dollar index stood at 101.2, on track for a 1.8 per cent gain this month, its best run since June.

The euro was close to a three-month low at $1.1367 after the European Central Bank's chief pointed to gradual action against inflation. Sterling held at $1.3248, also near a three-month trough, while Brent crude hovered around $106 a barrel. Markets doubted that new attempts to bring the Iran conflict to a close would succeed after US President Donald Trump turned down Tehran's ceasefire proposal.

Treasury yields pushed to fresh highs, with the 10-year at its loftiest level since 2007 and the 30-year at a peak last seen in 2004. Markets now see a more than 70 per cent chance of a Federal Reserve rate increase at the end of October, up from 57 per cent a week earlier, according to CME Group's FedWatch tool. The Reserve Bank of Australia was also expected to lift its key rate, while the yen eased to 157.40 per dollar.