By Rae Wee
SINGAPORE, Feb 17 (Reuters) - The dollar rode U.S.
Treasury yields higher on Friday and was eyeing a third straight
week of gains, as a bout of resilient economic data out of the
United States raised market expectations that more interest rate
hikes were in the offing.
Data on Thursday showed that the number of Americans filing
new claims for unemployment benefits unexpectedly fell last
week, while other data revealed that monthly producer prices
increased by the most in seven months in January.
The latest data releases gave the U.S. dollar a leg up,
knocking sterling to a fresh six-week low of $1.1957 on
Friday, while the euro fell 0.15% to $1.0657.
The Australian and New Zealand dollars were likewise pinned
near their six-week troughs hit in the previous session.
The Aussie was last 0.29% lower at $0.68595, having
fallen as low as $0.68405 on Thursday. The kiwi slipped
0.27% to $0.62385, after hitting its lowest level since Jan. 6
in the previous session.
"The U.S. economy, from recent data, shows that it's still
healthy. It doesn't seem to be going into a recession any time
soon," said Tina Teng, market analyst at CMC Markets.
"The markets are pricing for higher-for-longer rates."
Thursday's reports followed data from earlier this week,
which showed robust growth in U.S. retail sales in January and
signs of sticky inflation, stoking fears that the Federal
Reserve would have to raise rates higher than previously
expected.
U.S. Treasury yields have also surged on the back of further
hawkish rate repricing, with the two-year yields last
at 4.6549%.
The benchmark 10-year U.S. Treasury yield peaked
at 3.878% on Friday, its highest since Dec. 30.
Fed officials have also signalled that the U.S. central bank
has further to go in raising rates, with two policymakers saying
on Thursday that the Fed likely should have lifted interest
rates more than it did early this month.
Markets are now expecting rates to peak above 5.25% by July. Against a basket of currencies, the U.S. dollar index was last 0.09% higher at 104.20, having risen to a more than
one-month high of 104.24 in the previous session, and was on
track for a third straight weekly gain.
Elsewhere, the dollar was last 0.25% higher against the
Japanese yen at 134.29.
The greenback was eyeing a weekly gain of more than 2%
against the yen, its best week since last October.
Japan's government picked academic Kazuo Ueda as its new
central bank chief on expectations he can help keep inflation on
target and sustain economic growth and wage hikes, finance
minister Shunichi Suzuki said on Friday.
"It is expected that the most important task of nominee
Governor Ueda will be to guide the BOJ to an exit of its
ultra-accommodative (quantitative and qualitative easing)
policies," said Jane Foley, head of FX strategy at Rabobank.
"That, however, does not suggest that the BOJ will be in any
rush to change direction."
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(Reporting by Rae Wee; Editing by Sonali Paul)
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