$ index back above 100

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HONG KONG- The dollar index was back above 100 on Tuesday morning, supported by high US yields ahead of inflation data that is expected to show US prices gained the most in over 16 years, reinforcing expectations of aggressive Fed tightening policy.

The index stood at 100.11, testing last week’s near two-year high of 100.19.

The dollar’s gains have been most striking against the yen, and it was trading choppily at 125.47 yen on Tuesday morning, just off the overnight intraday high of 125.77, when it neared its June 2015 peak of 125.86. A move past that level would take the dollar to its highest against the yen since 2002.

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Japanese Finance Minister Shunichi Suzuki on Tuesday declined to comment on specific prices in foreign exchange markets, but said excess volatility and disorderly movements could have an adverse effect on the economy and financial stability.

The dollar also gained steadily overnight on the offshore Chinese yuan CNH, and reached a two-week high of 6.390 in early trade.

The dollar’s strength “was most apparent against JPY and CNH — currencies of economies with a dovish central bank,” said analysts at CBA in a morning note.

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