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LONDON/SINGAPORE, Sept 26 (Reuters) – The dollar rose to a new 10-month peak on Tuesday as U.S. bond yields rose to their highest since October 2007, while the Japanese yen recovered from an early fall, signs that Traders are on alert for. Of government interference.
Federal Reserve policymaker Neel Kashkari said Monday that, given the strength of the U.S. economy, interest rates should be raised again and kept “high for a long time” until inflation gets back to less than 2%. May it not happen.
His comments helped push the yield on 10-year US Treasuries – the benchmark US yield that sets the tone for borrowing costs around the world – to 4.566% on Tuesday. Bond yields move inversely to prices.
Higher US yields boosted the greenback’s attractiveness, pushing the dollar index to 106.2, its highest since late November 2022. The index, which tracks the currency against six major peers, was up very slightly at 105.96.
The euro was last up 0.1% against the dollar at $1.0596, having hit its lowest since March at $1.057 at the start of the session.
“The dollar is just a steamroller, it’s absolutely extraordinary,” said Joe Takei, head of FX analysis at broker Argentex.
“It’s exceptional in the US, it’s very hard to argue. We’re seeing consistently strong data there.”
The brief rally in the dollar further hurt the Japanese yen, which at one point fell below the 149 per dollar mark to 149.19 for the first time since October 2022.
Finance Minister Shunichi Suzuki said on Tuesday the government was “keeping a close eye on currency movements”, prompting the yen to par its losses against the greenback from where it last stood at 148.88 per dollar.
James Malcolm, head of FX strategy at UBS, said of Japanese authorities: “They have done everything they possibly could in terms of all the clear signs (of interference).”
He said: “Nobody wants to believe that this will happen until it actually happens, which is absurd because (Japan) has been the most consistent and most practiced at doing this for decades. “
Elsewhere, the British pound slipped to its lowest level since mid-March at $1.2168 and was last down 0.19% at $1.219. This comes after the BOE’s decision to keep rates at 5.25% last week and several poor economic data.
Tuesday marks one year since the pound fell to a record low of $1.0327 against the dollar following then-Prime Minister Liz Truss’ disastrous budget.
The Swiss franc also fell to 0.915 francs per dollar, its lowest level since March after the Swiss National Bank unexpectedly left interest rates on hold last week.
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Currency bid price at 1043 GMT
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Reporting by Harry Robertson in London and Tom Westbrook in Singapore; Editing by Jamie Freed, Kim Coghill and Alexander Smith
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