Dollar rose in American trade on Tuesday against a basket of major rivals, extending gains for the fourth straight session and hitting a three-week high amid a new influx of investments.
The Bank of Japan just today voted to exit negative interest rates, which convinced markets that the Federal Reserve will maintain its US policy tools constrictive for an extended duration.
The Index
The dollar index rose 0.45% to 104.06, the highest since March 1, with a session-low at 103.58, after closing up 0.15% yesterday, the third profit in a row as US yields edge up.
US Yields
US 10-year treasury yields rose by 0.3% on track for the seventh profit in a row, hovering near four-week highs at 4.348%.
The developments come after recent inflation data showed that Fed interest rates will likely remain high for longer than expected.
Fed policymakers have repeatedly insisted that changing policies will solely depend on data that proves inflation is sustainably heading towards 2%.
The BOJ
Bank of Japan voted to end eight years of negative rates today, making it the last bank to exit the unusual territory.
The BOJ’s policies remain accommodative, with interest rates now at zero percent.
Otherwise, the Reserve Bank of Australia voted to hold interest rates unchanged at 12-year highs as the fight with stubborn inflation continues.
US Rates
The odds of a US 0.25% interest rate cut in May stand at just 8%, and 55% for June.
Traders are pricing in 75 basis points of total US interest rate cuts this year.
The Fed
Later today, the Federal Reserve will open its two-day policy meeting, expected to maintain interest rates unchanged at 5.5%, the highest in 23 years.
The Fed’s policy statement and Fed Chair Jerome Powell’s subsequent press conference will likely provide important clues on the future of US interest rates.
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