The dollar rose near a one-week high on Wednesday as Treasury yields climbed and investors' risk sentiment soured.
The dollar index, measuring the currency's strength against the other six major currencies, closed 0.20 percent higher at 106.53. It continued its upward trend. As of writing, the index is trading at 106.81.
The benchmark U.S. 10-year Treasury yields rose to 4.964 percent early morning in Asia, inching closer to a 16-year peak of 5.0 percent it briefly reached on Monday.
On Wednesday, U.S. yields rose after a brief three-day dip from multi-year highs, impacting tech stocks, particularly within Nasdaq. It experienced its worst daily performance this year. Alphabet is also facing a downturn in its cloud division revenue alongside other major-cap stocks.
The weak Wall Street performance and mixed corporate earnings in the U.S. have caused investors' risk sentiment to drop.
"Markets are showing renewed signs of uneasiness with U.S. corporate earnings results an additional source of volatility," said Rodrigo Catril, senior F.X. strategist at National Australia Bank.
New U.S. single-family home sales jumped to a 19-month high in September, but mortgage rates nearing eight percent could dampen demand. The median home price fell at the fastest pace since 2009 in the same month as builders offered discounts to attract buyers. The data suggest that rising bond yields, which drive up mortgage rates, are cooling the housing market.
Dollar against major peers
The Japanese yen hit a new one-year low of 150.32 against the dollar overnight and last traded at 150.26. Finance Minister Shunichi Suzuki warned investors not to sell the yen on Thursday, saying that authorities were closely monitoring the situation.
"I'm watching market moves with a sense of urgency, as before," said Suzuki.
U.S. GDP data, due later on Thursday, can also highly impact the dollar/yen. In addition, the recent surge in global interest rates is putting more pressure on the Bank of Japan to adjust its yield curve control next week. Reuters reported that the central bank was considering raising the yield cap it had set three months ago.
Meanwhile, the euro remained stable at $1.0562 ahead of the European Central Bank's policy decision later today. The ECB will likely keep interest rates unchanged at a record high, ending 15-month-long hikes. However, it may discuss a faster reduction of its bloated government debt portfolio as it battles soaring inflation.
The Canadian dollar slipped 0.07 percent against the U.S. dollar to 1.38 per dollar after the Bank of Canada held its key overnight rate at 5.0 percent as expected. However, the central bank also signaled that further rate hikes could curb inflation.
The British pound was last trading at $1.2097, down 0.09 percent on the day and on track for a weekly decline of 0.5 percent.
The Australian dollar tumbled to an 11-month low of $0.6276. It previously dipped 0.35 percent at $0.6287. The currency is now weighed down by expectations of higher interest rates following surprisingly high inflation data on Wednesday.
According to Matt Simpson, market analyst for Forex.com, the Australian dollar stayed above 63 cents for most of the past few weeks despite the unfavorable data.
Analysts say the decline in the Aussie may be a temporary drop caused by low trading volume, and a rebound can happen soon.
Meanwhile, the New Zealand dollar also fell to an 11-month low of $0.5780, last down 0.22 percent at $0.5788.