NEW YORK: The US dollar hit a two-month high on Tuesday in line with higher Treasury yields after hawkish comments from Federal Reserve officials led investors to position for the possibility of further rate hikes.
Regional Fed Presidents James Bullard and Neel Kashkari on Monday indicated that the US central bank may need to continue hiking rates if inflation remains high.
“The focus is slowly going back towards inflation and all this hawkish Fed speak we’ve been getting and that’s been giving the dollar some support here,” said Edward Moya, senior market analyst at OANDA in New York.
The comments come after statements by Fed Chair Jerome Powell on Friday were viewed as being dovish.
“We’ve been getting a steady dose of hawkish Fed push back, but not really from Fed Chair Powell,” Moya said, adding that minutes from the Fed’s May meeting due on Wednesday will be watched for any further signs of his thinking. The dollar index, which measures the US currency against a basket of major peers, reached 103.65, the highest since March 20, and was last at 103.33. The greenback also rose to 138.91 against the Japanese yen, the highest since Nov. 30, before falling back to 138.35.
The euro slipped 0.18% to $1.0794. It is holding just above a two-month low of $1.0760 hit on Friday.
Euro zone data on Tuesday showed that business growth slowed slightly more than thought this month.
Investors are also focused on when Congress will raise the US debt ceiling. White House and congressional Republican negotiators will meet again on Tuesday to resolve a months-long impasse over raising the government’s $31.4 trillion debt limit.
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