Currency Buzz: Dollar Rallies After Fed Policy, US Treasury Yields Above 1.8%

27 Jan 2022 , 11:55 AM

The American dollar climbed to more than a one-month high after the Federal Reserve left monetary policy unchanged, but said it would be appropriate to raise borrowing costs soon to tame inflation amid a strong labor market. The central bank also said it would be ending its bond purchases that month as well as start reducing its asset holdings significantly after the lift off in interest rates. The dollar index, that measures the greenback against a basket of currencies was seen at 96.69, its best level since 20 December 2020. Meanwhile, yield on the benchmark 10-year Treasury note extended gains above 1.8%, after Federal Reserve Chairman Jerome Powell suggested there was plenty of room to raise borrowing costs.

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