Dollar in charge as euro, pound plumb 6-month lows

London, Sept. 27 (BNA): The dollar scaled a 10-month high against its major peers on Wednesday, pushing the euro and sterling to 6-month lows and keeping the yen deep in intervention territory, as the prospect of higher-for-longer U.S. rates gripped markets.

U.S. Treasuries stabilised after their recent heavy selloff, though yields remained near 16-year peaks, keeping the greenback solidly bid, Reuters reported.

The euro was last 0.1% lower at $1.0567, after hitting a six-month low of $1.0555 earlier in the session. The single currency is on track to lose more than 3% for the quarter, its worst quarterly performance in a year.

Sterling was also down 0.1% at $1.2149 after hitting a six-month trough of $1.2135 earlier on Wednesday, and was headed for a quarterly loss of more than 4%.

The U.S. dollar index, meanwhile, peaked at a 10-month high of 106.32.

“It’s clear now that markets see higher long-term yields in the U.S. for a longer period. That’s the main driver for the dollar here,” said Dane Cekov, senior FX strategist at Nordea.

“It’s been a while since we’ve seen 10-year yields at 4.5%.”

Fed officials have in recent days flagged the possibility that the central bank would need to raise interest rates further, after it kept rates steady last week but stiffened its hawkish monetary policy stance.

That has sent U.S. Treasury yields to multi-year highs as money markets have adjusted their expectations of where U.S. rates could peak, and for monetary conditions to remain tighter for longer than initially thought.

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The benchmark 10-year yield was last at 4.503%, after hitting a 16-year high of 4.566% in the previous session. The two-year yield stood at 5.047%.



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