The dollar settled yesterday after swinging amid bond market volatility in previous sessions, with investors focusing on US economic indicators, Federal Reserve comments and corporate earnings in search of clues to the path of interest rates.
The dollar index, which measures the performance of the US currency against six other major currencies, rose 0.09 percent to 101.81 in Asian trading, after falling 0.36 percent on Tuesday when it reversed its direction after rising 0.54 percent in the previous session. On Friday, the index fell to its lowest level in a year at 100.78
US Treasury bond yields for two years, which are highly sensitive to Federal Reserve expectations, recorded their highest level in almost a month at 4.231 percent at the close of trading yesterday and remained high in Tokyo trading yesterday.
The dollar rose against the yen 0.19 percent to 134.35 yen per dollar, after declining 0.29 percent on Tuesday.
Ole Hansen, head of commodity strategy at Saxo Bank, said the return to normal is due to the market adjusting again its expectations for the Fed's rate hike path.
James Bullard, president of the St. Louis Federal Reserve, said he's leaning towards a 75 basis point rate hike, against a market trend of a 25 basis point increase next month, ahead of a possible quarter-point cut of two times later this year. .
By contrast, Rafael Bostick, president of the Federal Reserve Bank of Atlanta, said in an interview with CNBC that he expected a single quarter-point increase, followed by a prolonged period of halt in interest rate hikes.
The Australian dollar almost settled at $0.6730, after rising 0.41 percent in the previous session.
The euro fell slightly to $1.0967, after rising 0.42 percent on Tuesday. The British pound also fell slightly to $1.2420, after rising 0.38 percent yesterday. Last year, the dollar index hit a 16-month peak and reached a two-decade high of 114.78 at the end of September, before a sharp decline continued through the beginning of February.
It then rebounded after a banking crisis sparked fears of a global recession, and reached a three-month high in early March.
In a related context, gold prices fell more than 1 percent, affected by the rise in US bond yields and the rise of the dollar, with some investors betting that the Federal Reserve halting the cycle of raising interest rates will take longer than expected.
Spot gold fell 1.5 percent to $1,974.89 an ounce by 10:26 GMT. US gold futures also fell 1.7 percent to $1,984.90.
Hansen said that the gold trading price also retreated from the 21-day moving average of about $1,990, which indicates a loss of some momentum and led to some profit-taking.
As for other precious metals, silver fell 1.9 percent to $24.73 an ounce, platinum fell by the same percentage to $1062.46, and palladium fell 0.6 percent to $1598.45.