The US dollar hit a one -week high against major currencies on Wednesday driven by rising U.S. bond yields and the depreciation of the Euro.
The US dollar index, which measures the greenback against major currencies, strengthened 0.26% to a trading level of 92.750, the highest level since early September 1.
According to currency analysts, the US dollar is doing an upward trend driven by U.S. bond yields and the opening of the market from the Labor Day holidays. The focus now shifts to the ECB meeting the next day.
10 -year Treasury yields have risen since jobs data released on Friday slightly disappointed the market but inflation remained high. Treasury yields have risen 1.35% since the employment report was published.
On the other hand, rising inflation has made it difficult to follow up on Fed policymakers who expect progress in the job market before a reduction in bond purchases.
Alan Ruskin, a macro strategist at Deutsche Bank, at the same time there are some concerns that nominal wages are still lagging behind in the face of rising consumer prices.
Investors are waiting for more indications from policymakers for any new indications of possible policy changes with the expectation of a tapering program to be announced later this year.
On the other hand, the Euro continues to depreciate ahead of the ECB meeting to be held on Thursday. It is possible that the ECB may tighten monetary policy faster than expected following the rise in inflation.
The Canadian currency continued to depreciate against the US dollar following the announcement of interest rate retention on Wednesday.
