USD hits one year high as U.S. yields surge

The U. S. dollar hit a one-year high on Tuesday on expectations the U.S. Federal Reserve will announce a tapering of its massive bond-buying program in November as concerns over soaring energy prices also sent investors to the safe-haven currency.

Yields on the U.S. two-year Treasury note jumped to their highest in more than 18 months, as investors sold U.S. debt, estimate that surging energy prices would fuel inflation and add to pressure on the Federal Reserve to take action sooner than anticipated.

Investors will watch U.S. Consumer Price Index data on Wednesday and retail sales data on Friday for further clues as to when the Fed might begin winding down stimulus.

The focus right now is Treasury rates. The credit markets are anticipating the taper starting in November.

The dollar index, which measures the greenback against a basket of major currencies, touched 94.563=USD, its highest since late September 2020.

The spike in U.S. yields prompted investors to dump the Japanese yen versus the dollar, resulting in the second-biggest daily fall in the Japanese currency on Monday.