US Dollar Broadly Higher Versus Major Currencies

Market Reviews

The US dollar reached an 11-month high against the Japanese yen, and reached a maximum level since August 21 against the euro, boosted by rising US Treasury yields, after optimistic US economic data and comments from the Fed officials. Australian dollar and New Zealand dollar are trading as the weakest ones, pressured by monetary policy divergence and falling Asian stocks.

The US Treasury bond yields jumped to perennial peaks on Wednesday, with the 10-year yield reaching a seven-year high after stable data on Wednesday confirmed that the Fed will again raise interest rates in December and continue to raise them next year. 10-year yield closed up 0.105 at 3.161.

DOW hit record high at 26951.81 overnight, but closed at 26828.39, up only 0.20%. S&P 500 closed up 0.07% and NASDAQ gained 0.32%. In Asia, Japanese Nikkei fell by 0.60%, Hong Kong HSI dropped by 1.68%. Singapore Strait Times lost 0.98%.

A report from Automatic Data Processing (ADP) showed that the growth rate of employment in the US private sector accelerated in September, stronger than experts' forecasts. According to the report, the number of employed increased by 230k in September, compared to the August figure of 168k. It was expected that the number of employees would increase by 185k.

Fed Chair Jerome Powell said the US is experiencing “a remarkably positive set of economic circumstances, and we’re working hard to try to sustain the expansion and keep unemployment low and keep inflation right on target”. On interest rates, he said they are “still accommodative” and “we’re gradually moving to a place where they’ll be neutral.”

Philadelphia Fed President Patrick Harker said he preferred Fed’s rate hike schedule to avoid inverting the yield curve and “it’s just a question of timing”. Richmond Fed President Tom Barkin said “growth is solid, unemployment is low, and inflation is at target”. Cleveland Fed President Loretta Mester said she supported a gradual pace of hiking.