The U.S. Dollar rallied broadly on expectations that an improving U.S. economy will bring forward the Federal Reserve Bank’s timing on an interest rate hike. Short term U.S. Treasury yields for 2-year notes were within striking distance of 3-year high of 0.590%, while 10-year yields moved above 2.50%. Falling values among several emerging markets currencies, specifically India and Turkey, also helped to push the greenback higher. The Dollar Index, which assesses the Dollar’s value in relation to a weighted basket of major peers, moved higher to 84.256 .DXY, not far from yesterday’s peak and moving closer to last year’s high.
As a result of increased interest in the greenback, as reported at 7:34 a.m. (EDT) in New York, the USD/JPY pair traded at a 6-year peak at 106.66 Yen, with analysts forecasting the strong possibility that the pair could soon hit the 108 or 109 Yen level. Meanwhile, given the anticipated divergence of their respective central banks, the EUR/USD was once again trading below a key level at 1.2940, some 22 pips from the session’s high.
Sterling Deteriorates Under Independence Threat
In the U.K., despite the threat of Scotland withdrawing from the union, the Pound Sterling managed to regain some ground and was trading at 1.6132 for the GBP/USD pair and at 0.8023 for the EUR/GBP pair. Scottish voters will be going to the polls next week to vote on a referendum for an independent Scotland and a recent survey predicts a very tight vote with a slight edge for the nationalist party which favors independence.