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Daily Currency Market Update:


HIGHLIGHTS:

The U.S. dollar rose to almost six-month highs against a currency basket on Wednesday, helped by gains in long-term U.S. Treasury yields, sending the euro below the $1.18 level. The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, rose 0.24% to 93.36 by 06:16 AM ET (10:16 AM GMT), the most since mid-December. Demand for the dollar continued to be underpinned after a surge in U.S. government bond yields gave fresh impetus to a rally that had lost momentum last week. The dollar jumped higher on Tuesday after a U.S. retail sales report indicated that consumer spending is on track to rebound after a soft patch in the first quarter, underlining expectations for continued economic growth. The dollar was also boosted by the surge in U.S. Treasury yields following the report, as traders continued to price in a faster pace of rate hikes by the Federal Reserve this year. The yield on 10-year U.S. Treasury notes rose as high as 3.095%, the highest level since August 2011. Bond yields move inversely to prices. The yield subsequently came off that level and was last at 3.061%. Yields have climbing higher since the Fed said on at its May meeting that inflation is moving closer to its 2% target. The Fed raised rates in March and projected two more rate hikes this year, although many investors see three hikes as possible.

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