Dollar Dominance: U.S. Yields Surge Sparks Global Currency Slide

The dollar gained strength amid rising U.S. yields following strong economic data, affecting global currencies. The yen neared intervention levels, and the euro and sterling dipped. Inflation signals and labor data are under scrutiny as markets adjust rate expectations. The Australian and New Zealand dollars hit lows on poor regional data.

The U.S. dollar surged to new heights on Wednesday, buoyed by positive economic data that drove up yields and diminished expectations of Federal Reserve rate cuts. This upward trajectory caused the yen to fall perilously close to levels that previously prompted intervention.

Japan's Finance Minister, Katsunobu Kato, raised concerns about speculative selling of the yen as the exchange rate approached the 160 level, reminiscent of when Japan last intervened to sell dollars. The yen hit 158.42 overnight, its lowest against the dollar in nearly six months, before settling slightly higher.

Economic experts, like Bart Wakabayashi, noted the strength of U.S. data, which may delay anticipated Fed rate cuts. Meanwhile, the euro, sterling, and the Chinese yuan experienced declines as traders keep a watchful eye on the upcoming U.S. labor data and potential impacts from Donald Trump's anticipated policy moves in another presidential term. With bond markets reacting strongly, the fallout extended to the Antipodean currencies, as both Australian and New Zealand dollars faced significant declines amidst regional economic downturns.

(With inputs from agencies.)