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Dollar, Yen Up as U.S. Bond Yields Hit Three-Month High By


© Reuters.

By Gina Lee – The dollar was up on Tuesday morning in Asia, with the yen trading near an almost three-month low to the dollar, with attracting Japanese investors.

The that tracks the greenback against a basket of other currencies inched up 0.07% to 93.448 by 11:54 PM ET (3:54 AM GMT).

The pair was up 0.21% to 111.23, climbing above the 111.07 mark hit on Monday, a level not touched since Jul. 5.

The pair edged up 0.19% to 0.7299, with data released earlier in the day showed that Australian contracted 1.7% month-on-month in August. The pair inched up 0.01% to 0.7017.

The pair inched down 0.02% to 6.4545 while the pair inched up 0.07% to 1.3704.

Shortly above 1.5% in the U.S. benchmark yield, Monday’s level was not reached since June 2021. Meanwhile, the yield for two years rose to its highest point since March 2020. Investors from Japan were attracted by this, as the yield curve control policy of Bank of Japan meant that 10-year Japanese bond yields remained close to zero.

The main result of the higher Treasury yields on currencies was to see USD/JPY making further upward progress now that it is against 111,” Ray Attrill, National Australia Bank’s head of FX strategy said in a note.

“111 will be a tough (nut) to crack, bearing in mind the pair has spent only two days with time above this level so far in 2021, and with having been as high as 1.77%,” the note added.

The climb in U.S. yield was attributable to the U.S. Federal Reserve’s more hawkish stance in its handed down during the previous week. Central bank may begin asset tapering by November 2021 or raise interest rates sooner than previously expected.

Investors have predicted that the trend of an increasing dollar may continue.

Mazen Issa, senior FX strategist at TD Securities said that while asset tapering isn’t surprising in itself, an earlier termination of its program will strengthen the fact that upside risks to dollar have decreased.”

According to the note, TD anticipates that the Fed will end quantitative easing by June 2022.

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