September 10th, 2014 by James
Today, the US dollar rose to a new six-year high against the Japanese yen as the Australian dollar nursed a second session of heavy losses after further gains in U.S. Treasury yields.
U.S. Treasury yields have moved up as a result, with the two-year US2YT=RR within sight of a three-year peak of 0.590 percent set in late July. On Wednesday the 10-year yield US10YT=RR popped back above 2.50 percent, off a recent low of 2.30 percent, and was at 2.505 percent in Asian trade.
“People missed their chance to buy the dollar on dips,” said Kaneo Ogino, director at Global-info Co in Tokyo, a foreign exchange research firm.
“The interest rate outlook is in focus, as Japanese yields will keep to lower levels,” he said.
The Australian dollar skidded 0.4 percent to $0.9162 AUD=D4, after dropping as low as $0.9154. This was due to a pick-up in market volatility pushing investors to pare back carry trades. The setback of Aussie dollar was sparked by a broad rally in the U.S. dollar. “Traders could see a further correction lower if we see a daily close south of $0.9175, which is a key support level,” said Stephen Innes, senior trader at OANDA Asia Pacific.
The euro edged down against the US dollar, moving back toward a 14-month trough of $1.2859 EUR= plumbed in European trade on Tuesday. The dollar index .DXY edged down slightly to 84.234 from Tuesday’s 14-month high of 84.519.