Precise Investors Editorial Team
The dollar’s jumped gathered pace, rising alongside U.S. Treasury yields that hit one-year highs
The dollar rode U.S. Treasury yields higher on Friday and was set for its biggest weekly gain in more than two months, as mounting inflationary pressures from higher energy prices fuelled bets on a U.S. central bank rate hike this year.
The dollar’s jumped gathered pace, rising alongside U.S. Treasury yields that hit one-year highs, as traders ramped up bets that the bank would need to raise rates this year.
Against the U.S. dollar, the euro dropped to a one-month low of $1.1635 and was set to lose more than 1.2% for the week.
The yen struggled on the weaker side of 158 per dollar despite domestic data pointing to a spike in wholesale inflation, bolstering the case for the Bank of Japan to raise interest rates as soon as June.
It was last 0.16% lower at 158.60 per dollar.
The Australian and New Zealand dollars also dropped heavily, with the Aussie down 0.8% to $0.7162, while the kiwi slipped 0.82% to $0.5863.
The U.S. dollar’s rally has been gathering pace all week on evidence that while domestic inflation is mounting, the U.S. economy remains resilient despite the ongoing Middle East war.
Data on Thursday showed U.S. retail sales increased further in April while weekly initial jobless claims figures pointed to stability in the labour market.
Investors are now pricing in close to a 50% chance that the central bank could raise rates in December, compared with less than a 20% chance a week ago, according to the CME FedWatch tool.
While we are still cognisant of the softer domestic demand conditions that are being weighed down by rising energy costs, our U.S. CPI forecasts have been revised higher in 2026 again with risks still biased towards the upside, said Alvin Liew, senior economist at UOB.
Against a range of currencies, the dollar rose to a more than one-month high of 99.203, taking its gains for the week thus far to 1.35%, the largest since early March.
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