September 26, 2023 / 08:08 AM IST

Sensex Today | Dollar at 10-month top as US yields spike; yen slides

The dollar stood by 10-month highs against a basket of major currencies on Tuesday, supported by U.S. bond yields scaling 16-year peaks, while the yen tiptoed deeper into the intervention danger zone.

A combination of resilient economic data, hawkish Federal Reserve rhetoric and a budget deficit to be financed by borrowing has the 10-year Treasury yield up more than 45 basis points in September to top 4.5% for the first time since 2007.

Rates markets are priced for an almost 40% risk of another Fed hike this year, against slimmer chances for another rise in Europe, and the difference has helped prop up a dollar many had bet would swiftly fall once short-term rates peaked.

As U.S. yields rose, the euro lost 0.5% overnight, hitting a six-month trough of $1.0575 and setting a course for its worst quarterly drop in a year, down about 3%.

Sterling is also set to snap three quarters of gains, with a loss of 3.8% over the three months to September. It fell to a six-month low of $1.2195 overnight and traded only a whisker above that level early in the Asia session. [GBP/]

The U.S. dollar index touched its highest since November at 106.1.