SINGAPORE — The US dollar hit a seven-month high against a basket of major international currencies on Monday (Oct 17) after comments from Federal Reserve Chair Janet Yellen boosted long-dated US bond yields.
The dollar index, which rose 1.4 percent last week, hit a seven-month high of 98.158 early Monday and last stood at 98.115.
The euro slipped to a two-and-a-half month low of US$1.0967 early on Monday, while the yen traded at ¥104.25 per dollar, near its two and a half month low of ¥104.635 touched last Thursday.
Against the Singapore dollar, which is managed against a trade-weighted basket of currencies of Singapore’s major trading partners and competitors by the Monetary Authority of Singapore, the US dollar was at a seven-month high, reaching US$1 to S$1.3929 at 8.45am (Singapore time) on Monday — a level not seen since early March.
US Federal Reserve Chair Yellen said on Friday that the Fed may need to run a “high-pressure” economy to reverse damage from the global financial crisis that depressed output.
Her remarks were not addressing immediate policy concerns directly and did not change the prevailing view that the Fed is likely to raise interest rates in December.
Yet speculation that she may prefer to keep easy monetary policy stance for a long time even if inflation exceeds its 2 per cent target pushed up long-dated US bonds, with the 30-year bond yield hitting a four-month high of 2.565 per cent.
The greenback garnered additional support on Friday from strong US retail sales and producer prices numbers for September — the latest indication that the US economy regained its momentum in the third quarter after a lacklustre first half.
While the market kept an eye on US yields to see how much further they could rise and lift the dollar, events that could impact investor risk appetite were also awaited to see if the greenback could retain its upward momentum.
“The schedule this week isn’t packed with strong US data releases, and market focus is likely to centre around three events,” said Mr Shin Kadota, chief Japan FX strategist at Barclays in Tokyo.
“These would be Wednesday’s China GDP data, the ECB policy meeting after recent talk of tapering and the last US presidential debate, which would give the market a chance to confirm if Clinton has the lead over Trump.”
The third and final US presidential debate, between Democrat Mrs Hillary Clinton and Republican Mr Donald Trump, takes place late on Wednesday (US time) and the ECB holds its policy meeting on Thursday. AGENCIES