Dollar firms see increased bond yields as inflation, rate hike expectations, and higher interest rates push up bond rates
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- World FX rates</a>
The dollar gained slightly on the day on Monday as Treasury yields rose on fears the Federal Reserve will have to raise interest rates sooner than previously anticipated to ease rising price pressures.
Market participants believe the U.S. central bank will have to act as inflation appears to be stubborn and unlikely to fade anytime soon.
Global inflation increases are also increasing expectations that rate hikes will have to be global, as New Zealand faced its highest price pressures in a decade and Bank of England Governor Andrew Bailey issued resounding confirmation that the central bank was ready to hike interest rates as inflation risks increase.
"Global bond markets are finally recognizing the dangers that inflation isn't as transitory as most central banks insist," Brown Brothers Harriman's Win Thin, who is the worldwide head of currency strategy, said in a report.
After rising to 94.17, the dollar index gained 0.03% against a basket of currencies to reach 93.99.
After a 0.23% decline, the euro jumped to $1.1601, after earlier falling to 1.0070. This year, it has fallen by 5%.
Sterling hit a 20-month high of 0.8427 against the euro before recovering to 0.8451.
The kiwi hit a one-month high of $0.7105 against the greenback, before retracing to $0.7071.
Analysts at Bank of America reported on Monday that commodity-linked currencies, such as the Norwegian krone and the Canadian and Australian dollars, have been the best performers since the summer as energy prices rise, while the euro and yen have remained the worst performers.
The yen was close to a new three-year low, with the dollar last up 0.06% at 114.28 Yen, close at Friday's 113.46 level that was last hit in October 2018.
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Price changes at 9:53AM (1353 GMT)