By Tom Westbrook

SINGAPORE (Reuters) – The dollar traded near its highest levels of the year on Wednesday, after driving higher with U.S. yields and benefiting from investor nervousness about the Federal Reserve starting to withdraw policy support just as global growth headwinds gather.

The dollar rose broadly overnight to lift the to an 11-month high of 93.805. The Asian session saw it fall to 92.728, just marginally lower than that.

U.S. Treasury yields are on the rise – benchmark 10-year rates have risen 25 basis points to 1.5548% in just five sessions – as Fed tapering is imminent and inflation looks more stubborn than expected. [US/]

As higher yields can attract flows from Japan, the Japanese yen is more sensitive than U.S. yields. It has dropped about 2% over five sessions, and is now at 111.57 dollars, its lowest point since February 2020.

Euro fell overnight to a 1-month low and last bought $1.1684. It also tested major support levels near its $1.1664 low in 2021, and its $1.1602 low in November 2020.

Energy prices continue to rise and there are concerns about China’s future growth. This is due in part to Fed’s hawkish tone and rising energy costs.

Deutsche bank strategists noted that the market is in a “twilight zone” as the year approaches 2021. This was in contrast to unencumbered optimism.

They stated that “persistently stagnant dynamics – lower GDP but a Fed that is hawkish – leaves little room for the dollar to falltrend.”

Sterling took a particularly heavy beating yesterday as concerns over the impact of an economic shortage and scramble to fuel drove it 1.2% lower against the stronger dollar. This was its biggest daily drop in nearly a year. [GBP/]

New Zealand, Australian and New Zealand dollar also fell and the kiwi dropped to their lowest point in a month. Central bank meetings loom next week in both countries and swaps pricing points to the Reserve Bank of New Zealand following Norges Bank and lifting rates.

” Imre Speizer from Westpac said the dollar is stuck at $0.7000 due to the Fed’s rising expectations.

The kiwi was last at $0.6947 and the at $0.7248. [AUD/]

On Wednesday, Japan’s ruling party will vote for its next leader. This almost certain person will be the country’s next prime Minister.

An ECB Forum panel will feature Christine Lagarde President, Jerome Powell Fed Chair, Haruhikokuroda Bank of Japan Governor and Andrew Bailey Bank of England Governor.

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Currency bid prices at 0051 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar

$1.1684 $1.1684 +0.01% -4.37% +1.1687 +1.1683

Dollar/Yen

111.5550 111.4700 +0.10% +8.03% +111.6100 +111.5700

Euro/Yen

130.34 130.25 +0.07% +2.69% +130.4100 +130.2600

Dollar/Swiss

0.9293 0.9293 +0.00% +5.04% +0.9294 +0.9292

Sterling/Dollar

1.3538 1.3536 +0.04% -0.89% +1.3544 +1.3539

Dollar/Canadian

1.2674 1.2686 -0.09% -0.47% +1.2688 +1.2670

Aussie/Dollar

0.7245 0.7240 +0.08% -5.80% +0.7250 +0.7239

NZ

Dollar/Dollar 0.6948 0.6960 -0.13% -3.20% +0.6962 +0.6947

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ