US Dollar Jumps as Government Bond Yields Rise

US Dollar Jumps as Government Bond Yields Rise

US Dollar Jumps as Government Bond Yields Rise

Asian shares mostly rose Tuesday as a surge in USA bond yields pushed the value of the dollar higher against other major currencies.

MSCI's broadest index of Asia-Pacific shares outside Japan .miapj0000pus edged up 0.09 percent. The Dow Jones industrial average fell less than 0.1 percent to 24,448.69. Australia's S&P/ASX 200 climbed 0.7 percent to 5,924.60, and South Korea's Kospi lost 0.2 percent to 2,468.15. The Dow rose 0.25 per cent overnight, ending a five-day losing streak, and the S&P 500 gained 0.18 per cent on optimism over a spate of upbeat earnings that managed to offset jitters over rising USA bond yields.

Markets around the globe are keeping a close eye on the US bond market after the most recent move in yields exacerbated a sell-off in stocks on Tuesday.

"We think the euro's weakness may be overdone as despite the US Treasury yield spike theme reverberating in the markets over the last 24 hours, the US economy is very much in the late stages of its economic cycle and a cautious ECB meeting is baked into markets", said Christin Tuxen, an FX strategist at Danske Bank in Copenhagen. "Expectations towards U.S. rate hikes being gradual are enabling equities to take the current yield rise in stride".

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U.S. treasury yields rose to 3% for the first time in more than four years, reflecting the durability of the United States economic expansion after USA consumer confidence rebounded in April and new home sales increased more than expected in March.

Bond yields move inversely to prices.

The dollar index, which measures the greenback against a basket of currencies, was steady near the more than three-month high of 90.985 hit in the previous session.

The single currency stabilised around US$1.22 on Tuesday after having plumbed to a low of US$1.2185 in the Asian session, its lowest since March 1. The ECB is widely expected to keep policy unchanged but its comments will be followed closely for further guidance on the timing of its scaling-back of massive monetary stimulus.

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Crude oil prices were up amid the prospect of fresh sanctions on Iran and concerns about output from Venezuela.

Spot gold was little changed at $1,323.34 per ounce at 0101 GMT.

Higher yields on bonds make gold a less attractive investment because it pays no interest.

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