U.S. bonds pushed up currencies on Wednesday, increasing long-term rates pushing the dollar to nearly a four-year high on the yen.
DXY down -0.05%, Yen USD up +0.05%
The U.S. dollar and yen also came under pressure from a global equity rally that eroded demand for assets categorized as safe havens.
The dollar soared to nearly 114.585 for the first time starting November 2017, with benchmark 10-year Treasury yields reaching a fresh five-month high at 1.6630% in Asia.
Meanwhile, two-year Treasury yields averaged nearly 0.4050% after cooling down sharply overnight from Monday’s 19-month high of 0.4480%, indicating a scaling back of bets for early Fed rate hikes.
Ray Attrill, head of F.X. strategy at National Australia Bank in Sydney, stated that risk sentiment remains on the rise, as U.S. yields fell back in the front-end, a signal of slight curling back in expectations for When Fed rates ‘lift-off’ might occur.
The dollar index was slightly changed at 93.822 from Tuesday when it lost nearly 0.2% and dropped to the lowest level this month at 93.501.