TOKYO- The dollar hit a seven-month high against the yen on Thursday as an orderly rise in US Treasury yields lent support ahead of a speech by Federal Reserve Chairman Jerome Powell that may determine the trend for global bond markets and currencies.
The dollar also traded near a three-month high against the Swiss franc and held on to gains against most currencies as a renewed sense of calm in the Treasury market supported sentiment.
However, currencies were subdued overall as traders avoided taking out big positions before the speech later in the day.
Investors are anxious to see if Powell expresses concern about a recent volatile sell-off in Treasuries and if there is any change in his assessment of the economy before the Fed’s next meeting ending March 17.
The dollar may continue to rise against the yen as long as Treasury yields rise at a measured pace, but the greenback is likely to fall against currencies of major commodities exporters as more signs point to a rebound in the global economy.
“The performance of the dollar will vary depending on the currency,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
“Dollar/yen looks well bid because of yields and because Japan’s economy is underperforming relative to the United States, but as long as commodity prices rise, the dollar will weaken against commodity currencies.”
The dollar rose to 107.09 yen, the highest since July last year.
The US currency bought 0.9195 Swiss franc, close to the highest since November.
The British pound eased slightly to $1.3940, while the euro traded at $1.2060, nursing a 0.24 percent loss from the previous session.
The benchmark 10-year Treasury yield edged up to 1.4825 percent in Asian trading. – Reuters