© Reuters. FILE PHOTO: The $100 bill is seen in this illustration taken in Seoul February 7, 2011.Reuters/Lee Jae-won
by Kevin Buckland
TOKYO (Reuters) – The dollar hit a two-week high against the yen on Wednesday, boosted by a rise in U.S. Treasury yields due to renewed global inflation concerns.
An index that measures the euro against six major currencies including Japan rose 0.19 percent to 101.94, extending Tuesday’s 0.38 percent gain when data showed euro zone consumer inflation hit a record high.
The dollar rose 0.28 percent to 129.07 yen, having touched 129.185 earlier, for the first time since May 18.
The yield on the benchmark 10-year U.S. Treasury note hit 2.884% overnight, its highest level since May 19.
The euro was down 0.15% at $1.0718, continuing to pull back from a more than one-month high of $1.0787 hit on Monday after the European Central Bank shifted to a more hawkish stance.
The dollar index fell to a one-month low of 101.29 on Monday from a near two-year high of 105 hit in mid-May, as U.S. inflation and other economic indicators showed signs of peaking amid aggressive Fed tightening. .
Markets have already priced in a half-percentage-point rate hike at the Fed’s meetings this month and next, in line with hints from policymakers, but otherwise the outlook is unclear.
The closely watched monthly U.S. jobs report due on Friday may provide some fresh clues.
“It’s too early to say the dollar index has peaked in the long term,” Westpac strategists wrote in a note to clients, referring to the U.S. dollar index.
“The ECB is expected to raise rates significantly by 180 basis points by the end of 2023, about the same level as the Fed, but it’s hard to see the ECB acting positively.»
The dollar index is likely to remain between 101 and 105 for “some time” before resuming its uptrend, they wrote.