The dollar eased on Tuesday from its rally at the start of the week, but hovered near a one-month peak as traders raised their forecasts of U.S. Federal Reserve interest rate levels needed to tame inflation.
The report, which wrongfooted traders banking on an imminent pause in the Fed's rate-hiking cycle, gave the U.S. currency a leg up in previous sessions, though it gave back some of those gains in Asia trade on Tuesday.
Similarly, the kiwi rose 0.29% to $0.6323, but was not far from Monday's one-month trough of $0.6271. "Since last Friday, the U.S. reported a stronger than expected jobs number, this has reversed expectations that the Fed would pivot in its monetary policy," said Tina Teng, market analyst at CMC Markets.U.S. Treasury yields have risen on the back of higher rate expectations, with two-year yields touching a one-month high of 4.4930% on Monday. Two-year yields last stood at 4.4243%.
Futures pricing show that markets are expecting the Fed funds rate to peak just above 5.1% by June, compared with expectations of less than 5% prior to Friday's jobs report.
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