Dollar up with Treasury yields, amid expectations of higher ‎interest rate hike

The dollar rose as US Treasury yields gained today, Friday, heading for a third week of gains, as a wave of strong economic data in the United States increased market expectations that a new interest rate hike is on the horizon.

According to “Reuters”, Thursday’s data showed that the number of Americans who filed new applications for unemployment benefits unexpectedly decreased last week, while other data revealed that monthly producer prices rose by the largest amount in seven months in January.

The new data gave a boost to the dollar, prompting the pound sterling to fall to a six-week low of $1.1957 on Friday, while the euro fell 0.15 percent to $1.0657.

Similarly, the Australian and New Zealand dollars remained near the six-week lows they hit in the previous session.

The Australian dollar was last down 0.29% at $0.68595, after falling as low as $0.68405 on Thursday. Its New Zealand counterpart fell 0.27 percent to $0.62385, after hitting its lowest level since January 6 in the previous session.

“The US economy, according to recent data, is still showing good resilience,” said Tina Ting, market analyst at CMC Markets. It does not seem that he will enter into a recession anytime soon

She added that the markets expect interest rate increases for a longer period

Thursday’s reports came on the heels of data released earlier in the week showing strong growth in US retail sales in January and signs of persistent inflation, which raised fears that the Federal Reserve will be forced to raise interest rates at a pace. Higher than previously expected

US Treasury yields also rose with the change in interest rate expectations.

The yield of the standard 10-year Treasury bond reached a peak of 3.878 percent today, Friday, the highest level since December 30.

Against a basket of currencies, the dollar index advanced 0.09 percent to 104.20, after reaching the highest level in more than a month at 104.24 in the previous session. It is on its way to achieving its third consecutive weekly gain

The dollar also rose 0.25 percent against the Japanese yen, recording 134.29.

The dollar is heading for weekly gains of more than two percent against the yen, its best week since last October.

Japanese Finance Minister Shunichi Suzuki said on Friday that the government had chosen academic Kazuo Ueda as the new head of the central bank on expectations he could help keep inflation at a target level, maintain economic growth and raise wages.