The five-year high is close to the yen as US yields rise Fed Fed by Reuters

By Kevin Buckland

TOKYO (Reuters) – The dollar was nearing a five-year high on the yen on Thursday, boosted by a rise in the Federal Reserve’s rate hike in March, helped by a rise in US Treasury yields.

The greenback was at 116,115 yen, up slightly from Wednesday, when it returned to a high of 116,355 on Tuesday, fueled by hawkish rhetoric from the Fed official and a strong U.S. employment report.

Expectations of a tightening of policy have hurt more risky assets, with the British pound falling from a two-month high and the cryptocurrency falling to a multi-month low.

Faith officials said the “very tight” labor market in the U.S. could ensure that rates could rise earlier, and could also reduce the central bank’s overall assets to control high inflation – a process called quantitative easing (QT) – minutes of Dec. 14. Show 15 policy meetings.

In line with that, the future of the federal funds rate was roughly a quarter of a percent increase in the Fed’s 80% chance at the March meeting.

Earlier, the ADP National Employment report showed that US private payrolls rose more than twice as much as expected by economists surveyed by Reuters last month, boosting expectations for non-farm payrolls on Friday.

“The odds of a rate hike in March have risen and with the threat of QT this year, the USD should remain resilient,” strategist TD Securities wrote in a report.

“This should be supported over time, even though we believe that a very hawkish Fed could lead to short-term indigestion in risky markets.”

The currency, which measures against the yen and five other major counterparts, was flat at around 96,209 on Wednesday, when it was as steep as 0.44% of daily losses after the minutes were published.

The five-year Treasury yields, which are very sensitive to interest rate expectations, rose to a two-year high.

Although the Fed has been growing steadily in recent months, noting three-quarter rate hikes at its December policy meeting this December, the dollar’s ​​index gains have stalled since reaching a 16-month high of 96,938 at the end of November.

“Trends and current dynamics remain in favor of the USD, but prices will have to surpass the highs of Q4 2021 in most cases to confirm upward trends,” wrote George Davis, an RBC strategist, in a report stating the euro and sterling. and the Australian dollar in particular.

The euro was trading at $ 1.1310, which has continued to strengthen since mid-November. It fell below $ 1.1186 on November 24 for the first time since July 2020.

The pound traded at $ 1.3550, after falling back to a two-month high of $ 1.3599 for nearly two months after Fed minutes.

It fell to $ 0.7215 from its daily high of $ 0.7273 on Wednesday.

In cryptocurrencies, bitcoin stabilized at around $ 43,600, after falling from a one-month low in the previous session to $ 42,413.59.

Ether regained its composure to trade at around $ 3,500 after falling to $ 3,410.22 for the first time in midnight in October.