The US Dollar Rises Boosted by Treasury bonds

The US dollar advanced for the third day in a row on Tuesday, boosted by a rise in Treasury yields ahead of a large number of Fed speakers this week who may confirm expectations to start reducing asset purchases before the end of the year, and the benchmark US 10-year Treasury yields hit their highest level in three months at 1.516% on Monday.

Fed officials, including an influential member of the board of directors, have linked the reduction in the Fed’s monthly bond purchases to continued job growth, with the September employment report, now a potential catalyst for the gradual decline in central bank bonds.

Federal Reserve Chairman Jerome Powell, who will join Treasury Secretary Janet Yellen, speaks before Congress on Tuesday. The dollar index, which measures the greenback against six major competitors, rose 0.1% to 93.37, and the dollar extended its gains after data showed that orders New and major US capital goods shipments rose strongly in August, rising 0.5% in August amid strong demand for computers and electronic products, but the market was more focused on the US Treasury market.

US yields surged to their highest levels since late June in anticipation of tighter monetary policy after the Federal Reserve announced last week that it may begin tapering as soon as November and may follow announced interest rate increases sooner than expected, TD expects that the Fed ends its quantitative easing program by June 2022.

The dollar rose 0.3 percent against the yen to 110.99 yen, after earlier rising to its highest level in nearly three months. It rose 0.2% against the Swiss franc to 0.9259 francs, with no real reason to fall. Fears that Evergrande, China’s second-largest developer, could default on its $305 billion debt, overshadowed trade in recent weeks.