Dollar pushes towards fresh 24-year peak versus yen after US CPI shock

The dollar climbed close to a 24-year peak against the yen on Wednesday amid a jump in United States yields after hotter-than-expected inflation boosted bets for even more aggressive monetary tightening by the Federal Reserve next week. The dollar rose as high as 144.965 yen in the Asian session, taking it close to the high of 144.99 hit a week ago, a level not seen since August 1998. It last traded 0.15 per cent lower at 144.41. Overnight, the currency pair, which is extremely sensitive to rate differentials, surged 1.26pc as 10-year Treasury yields climbed to a three-month high following an unexpected rise in the US consumer price index (CPI) for August. The yield on two-year Treasury notes, which typically reflects interest rate expectations, peaked at 3.804pc on Wednesday, the highest since 2007. The 10-year yields last stood at 3.431pc. “This has really shattered the illusion … that inflation had peaked and was coming down,” Ray Attrill, head of currency strategy at National Australia Bank, said in a podcast. “Hence markets have decided that next week’s Fed decision is not between 50 and 75 (basis point increase), it’s now between 75 and 100.”