The dollar rose as far as 130.23 yen, its highest since May 11, extending Wednesday’s 1.1% gain and heading back towards its 20-year peak of 131.34 hit in May.
“In the last 48 hours or so we’ve seen a reversal in declines in US Treasury yields – the 10 year is now back near 3% – equity markets have been struggling and the US dollar strengthening. It’s almost a mirror image of what we saw last week, when there was talk of a possible pause in the tightening cycle.”
The US benchmark 10-year yield hit a two-week high of 2.951% on Wednesday after data showed US manufacturing activity had picked up in May as demand for goods remained strong, which could allay fears of an imminent recession.Yields have been rising as the US Federal Reserve has raised interest rates quickly in an attempt to bring red hot inflation under control while hoping to avoid pushing the economy into recession.