U.S. Dollar Appreciates Amid Higher Treasury Yields

(RTTNews) - The U.S. dollar strengthened against its major counterparts in the European session on Wednesday amid rising treasury yields, as hawkish comments from Federal Reserve officials revived the prospects of aggressive monetary tightening and the threat of a recession.

Minneapolis Fed President Neel Kashkari said on Tuesday that the central bank may require to lift its benchmark policy rate above 4.75 percent if underlying inflation did not move down.

Atlanta Fed president Raphael Bostic said inflation remained elevated and that is creating tension and disequilibrium in the market place.

The dollar index that tracks the greenback against a basket of other currencies touched 112.54.

The yield on the 10-year U.S. treasury note rose to 4.067 percent. Yields move inversely to bond prices.

Investors await U.S. housing data for September and the Fed's Beige book report for more direction.

The greenback climbed to 2-day highs of 1.1245 against the pound and 0.9805 against the euro, after dropping to 1.1358 and 0.9873, respectively in early deals. The greenback is seen finding resistance around 1.10 against the pound and 0.96 against the euro.

The greenback touched a 32-year high of 149.48 against the yen and a 2-day high of 1.0010 against the franc, up from its prior lows of 149.10 and 0.9929, respectively. The greenback is likely to test resistance around 153.00 against the yen and 1.02 against the franc.

In contrast, the greenback pulled back to 0.5702 against the kiwi, 0.6317 against the aussie and 1.3724 against the loonie, following its previous highs of 0.5668, 0.6286 and 1.3785, respectively. The greenback may test support around 0.61 against the kiwi, 0.69 against the aussie and 1.32 against the loonie.

Looking ahead, Canada inflation data and U.S. building permits and housing starts, all for September, as well as the Fed Beige book report will be released in the New York session.