The U.S. dollar rose marginally on Wednesday to hit its highest levels since late October against a basket of major currencies as the euro extended its losses over worries about euro zone sovereign debt.
The dollar’s strength boosted exporters in Japan, helping to push the Nikkei average up to a four-month high, while gold and silver inched up again after pulling back from record highs reached on Tuesday.
The dollar gained as U.S. Treasury bond yields rose, with the impact of the currency move felt across asset classes. The dollar index rose as high as 77.869, a level it last touched in late October.
“We’ve failed to notice that there is an improved tone to U.S. data and that is manifesting itself in a bounce in the U.S. dollar and it is manifesting itself in a bounce in U.S. Treasury yields,” said Robert Rennie, chief currency strategist at Westpac Bank in Sydney. “That is a process that can go a bit further. It’s quite a potent force in the short term,” he said. [Read more...]