The U.S. dollar traded stronger in the Asian session driven by 10 -year U.S. bond yields that soared to a two -year high following market optimism for an interest rate hike by the Federal Reserve (Fed).
The benchmark 10 -year bond yield rose to 1.88%, the highest level it has ever touched since January 2020 while the 2 -year yield jumped above 1% for the first time since February 2020.
This increase indirectly gives an indication of increased investor confidence in tightening policy.
The first FOMC meeting for the year will take place next week and this is certainly the most awaited by investors to get an indication of when and how much the Fed will raise rates.
Meanwhile, the euro was among the currencies that showed its worst performance following the strengthening of the greenback dollar. The European Central Bank (ECB) is now one of the most dovish central banks, causing the euro to continue under pressure.
The pound continued to slip further from a two -month high against the US dollar, with investors ’focus now shifting to the publication of inflation data on today’s European session.
Earlier, investors were spotted on UK employment data showing a positive reading, with the unemployment rate posting a better -than -expected reading by falling to 4.1% in the three months to November.
