The dollar stood by 10-month highs against a basket of major currencies on Tuesday, supported by US bond yields scaling 16-year peaks, while the yen tiptoed deeper into the intervention danger zone.

A combination of resilient economic data, hawkish Federal Reserve rhetoric and a budget deficit to be financed by borrowing has the 10-year Treasury yield up more than 45 basis points (bps) in September to top 4.5% for the first time since 2007.

Rates markets are priced for an almost 40% risk of another Fed hike this year, against slimmer chances for another rise in Europe, and the difference has helped prop up a dollar many had bet would swiftly fall as the Fed signaled an end to hikes.

The euro nursed Monday’s 0.5% drop and was parked by a six-month low at $1.0584. It’s on course for a 3% drop in the quarter, its worst quarterly percentage loss for a year.

Sterling is also set to snap three quarters of gains, with a loss of 3.8% over the three months to September. It fell to a six-month low of $1.2195 overnight and traded only a whisker above that level in the Asia session.

The US dollar index touched its highest since November at 106.1 on Monday and was at 106.03 on Tuesday.

The yen hit 148.97 to the dollar on Monday and last traded at 148.88.

The Aussie was last steady at $0.6417 and the kiwi at $0.5962.

China’s yuan held at 7.3099.

Source: Qatar News Agency