Daily Times

NEW YORK: The US dollar hit a more than three-week high against the euro and a nearly three-week peak against the yen on Wednesday, tracking a rise in US Treasury yields on expectations of a more hawkish Federal Reserve.

The euro hit $1.1257 its lowest level against the greenback since April 26, while the dollar hit 109.83 yen its highest against the Japanese currency since April 28. The dollar hit a nine-week high against the Swiss franc of 0.9843 franc. A rise in Treasury yields on Wednesday boosted the dollar, analysts said. Benchmark 10-year Treasury note yields hit a 15-day high of 1.828 percent, while two-year yields hit a three-week peak of 0.863 percent.

Analysts said Treasury yields and the dollar were reacting to hawkish comments from Fed officials on Tuesday.

Dallas Fed President Robert Kaplan said he would advocate for an interest rate hike in upcoming meetings, while Atlanta Fed President Dennis Lockhart and San Francisco Fed President John Williams said the Fed could still raise interest rates two or three times this year.

“We’ve seen quite a lot of Fed speakers suggesting that the market is under-pricing tightening, and I think the rates market is beginning to get that message and is adjusting,” said Daniel Katzive, head of FX strategy for North America at BNP Paribas in New York. “That is supporting the dollar.” Rate futures, based on the CME’s Fedwatch, moved to price in a 74 percent chance of a rate hike by December, with a 57 percent chance of a move by September. The chance of a hike in June was at 19 percent.