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The dollar maintains its strength, aided by higher rates

Image: Reuters Berita 24 English - In early trade on Thursday, the dollar rose to a three-week high versus the yen and retained gains again...

Image: Reuters

Berita 24 English - In early trade on Thursday, the dollar rose to a three-week high versus the yen and retained gains against other major currencies, boosted by this week's rises in US Treasury rates, which hit two-week highs overnight.

The dollar climbed to 130.23 yen, its best level since May 11, extending Wednesday's 1.1 percent rise and edging closer to the 20-year high of 131.34 set in May.

The euro was trading at $1.0653, down 0.81 percent overnight to a 10-day low, and sterling was trading at $1.247, down 0.96 percent on Wednesday. The dollar index is now at 102.53, putting it on the offensive.

Ray Attrill, head of foreign exchange strategy at National Australia Bank, stated, "If you look at the equity market, bonds, and dollars, it all sort of hooks up."

"We've seen a reversal in reductions in US Treasury yields in the last 48 hours or so, with the 10-year again back near 3%, equity markets faltering, and the US dollar rising. It's nearly a carbon copy of what we saw last week, when there was speculation of a tightening cycle stop."

"Also, I believe the euro has pretty well done all it can on the upside ahead of the ECB meeting next week," he added.

The benchmark 10-year yield in the United States rose to 2.951 percent on Wednesday, a two-week high, as statistics indicated that manufacturing activity in the United States increased in May, indicating that demand for goods remained strong, easing fears of an impending recession.

Job opportunities in the United States also remained strong.

Yields have been rising as the Federal Reserve of the United States has raised interest rates swiftly in a bid to bring raging inflation under control while avoiding a recession.

Last week, the spike came to a halt after Atlanta Fed President Raphael Bostic suggested at the Fed's September meeting that interest rate hikes could be paused, depending on inflation and the economic impact of higher rates.

The 10-year yield was 2.9168 percent at the time of writing.

Traders are anticipating fresh U.S. employment data due later Thursday and U.S. payroll data on Friday.

They're also starting to think about the European Central Bank's (ECB) policy meeting next week, when the central bank is likely to provide more specifics about its rate-hiking plans.

The Australian dollar was slightly weaker at $0.7161, and bitcoin was trading around $29,800 after falling overnight after failing to maintain its surge above $30,000 earlier in the week.

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