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Dollar Hits Six-Year High Versus Yen While Bonds Fall

The dollar climbed against most peers, touching its strongest level versus the yen since 2008, while bonds and commodities declined amid speculation about prospects for U.S. interest rates.

The U.S currency bought 106.35 yen by 9:01 a.m. in London, while the Bloomberg Dollar Spot Index rose 0.2 percent. The Bloomberg Commodity Index of 22 raw materials dropped 0.3 percent, with Brent oil falling 0.4 percent. Standard & Poor’s 500 Indexfutures and Europe’s Stoxx 600 were little changed. Yields on 10-year Australian bonds advanced 11 basis points as the rate on three-year Treasuries moved above 1 percent before debt auctions this week.

The dollar is cementing gains amid speculation over U.S. interest rates, with Federal Reserve research suggesting investors may be underestimating how quickly policy makers could raise key borrowing costs. Markets in mainland China resume after a holiday today, after data yesterday showed a surprise drop in imports fueled a record trade surplus in August. Ukraine’s defense ministry claimed rebels continued shelling its positions in the country’s east as the European Union delayed additional sanctions on Russia over the conflict.

“Higher U.S. yields (GACGB10) are fueling U.S. dollar buying,” said Naohiro Nomoto, an associate for foreign-exchange trading at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “There looks to be further upside in U.S. yields, especially on the long end. There is speculation that the Fed will revise its forward guidance at next week’s meeting.”

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