Dollar Index Advances Before U.S. Growth Data, Aussie Declines

The Dollar Index rose for a second day before U.S. data tomorrow on first-quarter growth amid speculation the Federal Reserve will cut monetary stimulus.

The greenback held an advance versus the euro after Treasury yields (USGG10YR) climbed to a one-year high. The Australian dollar fell to the weakest level since October 2011 versus its U.S. counterpart. The yen rose as Japanese stocks pared gains.

“The dollar is strong,” said Marito Ueda, the senior managing director at FX Prime Corp. (8711), a currency-margin company in Tokyo. “The U.S. economy is steadily recovering, and a reduction in monetary easing appears to be coming into view.”

The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against currencies of six major U.S. trading partners, added 0.2 percent to 84.246 at 9:51 a.m. in Tokyo. It reached 84.498 on May 23, the most since July 2010.

The dollar was little changed at $1.2855 per euro after rising 0.6 percent yesterday. The yen strengthened 0.2 percent to 131.38 per euro and rose 0.2 percent to 102.21 per dollar. The Aussie dollar fell 0.5 percent to 95.69 U.S. cents, after dropping to 95.56, the weakest since Oct. 5, 2011.

The Topix (TPX) index of Japanese shares pared its advance to 1 percent from 2.1 percent.

Yields on 10-year Treasury notes jumped as much as 17 basis points yesterday to 2.18 percent, a level unseen since April 5, 2012. They fell one basis point to 2.15 percent today.

The U.S. Commerce Department is likely to say tomorrow the world’s biggest economy grew at an annualized 2.5 percent pace in the first quarter, according to the median forecast of economists surveyed by Bloomberg News. It would be unchanged from the preliminary reading released last month.

(Source: Bloomberg)