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The dollar rose as US Treasury yields rose on Friday, heading for a third week of gains, as a wave of strong economic data in the United States increased market expectations that a new interest rate hike is on the horizon.
Thursday’s data showed an unexpected drop in the number of Americans filing new claims for unemployment benefits last week, while other data showed monthly producer prices rose by the most in seven months in January.
The new data gave a boost to the dollar, pushing the pound to a six-week low of $1.1957 on Friday, while the euro fell 0.15% to $1.0657.
Similarly, the Australian and New Zealand dollars remained near the six-week lows hit in the previous session.
The Australian dollar was last down 0.29% at $0.68595, after falling as low as $0.68405 on Thursday. Its New Zealand counterpart fell 0.27% to $0.62385, after hitting its lowest level since January 6 in the previous session.
“The US economy, according to recent data, shows that it is still resilient. It doesn’t look like it will enter a recession anytime soon,” said Tina Ting, market analyst at CMC Markets.
She added that markets expect interest rate increases for a longer period.
The reports on Thursday came on the heels of data released earlier in the week that showed strong growth in US retail sales in January and signs of persistent inflation, which raised fears that the Federal Reserve (the US central bank) will be forced to raise interest rates at a higher rate than it had previously. previously expected.
US Treasury yields also rose as interest rate expectations changed.
The benchmark 10-year Treasury bond yield peaked at 3.878 percent on Friday, the highest level since December 30.
Against a basket of currencies, the dollar index advanced 0.09% to 104.20, after reaching the highest level in more than a month at 104.24 in the previous session. It is on track for its third straight weekly gain.
The dollar also rose 0.25 percent against the Japanese yen, recording 134.29.
The dollar is heading for a weekly gain of more than two percent against the yen, its best week since last October.
Japanese Finance Minister Shunichi Suzuki said on Friday that the government had chosen academic Kazuo Ueda as the new head of the central bank on expectations he could help keep inflation at a target level, maintain economic growth and raise wages.
