The US dollar approached its highest since February on speculation that fiscal-stimulus under President-elect Donald Trump will bolster US growth and drive inflation, prompting the Federal Reserve to increase interest rates.
The dollar index was up 0.4 percent at 99.471 after touching 99.680, its highest since Jan. 29.
The greenback has soared on expectations that Trump’s administration would boost spending and lift inflation, which spurred an elevation of Treasury yields.
The 10-year Treasury note yield rose to a 10-month high of 2.2 percent in Asia.
“What was expected to be a gradual dollar rise is going much faster than expected after Trump’s win,” “With the possibility of reflationary policies being enacted, the market is bracing for a new bull phase under a different set of rules.”
– said Koji Fukaya, president of FPG Securities in Tokyo.
“While the dollar rise before the U.S. election was driven to a large degree by speculators unwinding their positions, this phase is more conducive for participants to go long on the dollar anew,”
“The dollar is strengthening along with the rise in U.S. yields, reflecting expectations for economic expansion from fiscal spending,” “Japan’s 2 percent growth can be used as a reason for the BOJ not lowering interest rates for a while.”
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, rose 0.5 percent as of 6:58 a.m. in London, after reaching the highest level since Feb. 3. The gauge surged 2.8 percent last week, the most since September 2011.
The yen declined 0.9 percent to 107.56 per dollar after reaching 107.65, the weakest level since June. The euro fell 0.7 percent to $1.0784 per dollar.