Dollar’s Up Trend Gains Momentum

During Monday’s Asian trading session the U.S. Dollar Index traded higher and close to a 2½ week peak; individually, the greenback’s value surged against the Yen following last week’s Fed announcement which heightened expectations that the central bank would soon be tightening its monetary policy. On that news, treasury yields for U.S. 10-year paper jumped to a 2-year high which helped to lift the U.S. Dollar Index, the gauge by which the value of the greenback is weighed relative to its major peers.

As reported at 1:10 p.m. (JST) in Tokyo, the U.S. Dollar Index was trading 0.4% higher at 82.692 .DXY before settling back to 82.646 .DXY; last week, the Index posted a 2.2% gain on the news. The USD/JPY pair gained 0.7% and traded at 98.51 Yen slipping from the June 11th high of 98.72 Yen.

While the news has been good for dollar bulls, it has been anything but for commodity-linked currencies, which are already feeling pressure from heightened fears of stress within the Chinese banking system which are weighing on China’s growth outlook. The Australian Dollar held close to last week’s 33-month trough of $0.9160 and traded 0.1% lower at $0.9207. Analysts, including those at JP Morgan, are revising their outlook for the Aussie Dollar, which previous expectations of parity against the greenback now being scaled back substantially.