TOKYO- The dollar held near a 3 1/2-month high against its rivals on Tuesday as higher bond yields and expectations of faster economic normalization from the pandemic in the United States put the US currency at an advantage.
The dollar’s index against six major currencies rose 0.1 percent to 92.469, its highest since late November, building on a 0.5 percent gain on Monday.
Against the yen, the dollar rose to 109.235 yen, its highest level in nine months, while the euro was nearly flat at $1.18530, hovering near lows last seen in late November.
The safe-haven Swiss franc softened to 0.9369 per dollar, its lowest level since late July, while the British pound inched up 0.1 percent to $1.3834, having touched a three-week low of $1.3779 on Friday.
“The move in the last two to three weeks has been driven by real yields, and that is what is supporting the dollar,” said Mayank Mishra, an FX strategist at Standard Chartered Bank in Singapore.
“It is interesting that despite the fact that US equities have started to bear the pain of rising yields, dollar/yen continues to make new highs,” Mishra added. “The pair’s own risk correlations have broken down and real yields are in the driving seat.”
The dollar index has firmed more than 2 percent so far this year as upbeat marcoeconomic data, combined with a loose monetary policy, has lifted bond yields and pressured richly valued US technology stocks. – Reuters