Dollar hits 2-mth high vs yen on heightened Fed hike expectations

A trader works on the floor of the NYSE in New York

The dollar fell back against the euro Thursday but firmed against the yen, as markets assessed the Federal Reserve's outlook for USA interest rates.

The Australian dollar was the biggest mover on the day, falling 1.1 percent to $0.7941.

Benchmark 10-year German government bond yields were marked 4 basis points higher at 0.48%, the highest since early August, while 2-year U.S. Treasury notes were seen holding almost a 2008 high of 1.44% during European trading.

Spot gold was up 0.3% at $1,310.51 an ounce at 1.45pm GMT, off the previous day's low of $1,304.10.

The greenback was just 0.1 percent lower at 111.47 yen JPY= , below its eight-week peak of 111.87 set earlier on Tuesday.

The pan-European STOXX 600 share index dipped less than 0.1 per cent. The Swissy has already shown signs that it doesn't want to fall further lower, as indicated for example by the sellers' unsuccessful attempts to push it below the 2016 low of 0.4445 throughout the summer.

The euro shed 0.15 per cent to $1.1877 after dropping 0.8 per cent the previous day, when it snapped a four-session winning run.

"Gold prices also came under some selling pressure, with investors dismissing geopolitical risks and instead focusing on the possibility of rate hikes from central banks", ANZ analyst Daniel Hynes said in a note. He said gold selling could intensify if U.S. Treasury yields rise more or the dollar strengthens further. They earlier pared gains after data showed a bigger-than-expected build in US crude inventories.

Crude oil futures inched lower Thursday, trimming recent gains after the Federal Reserve suggested a rate hike is imminent.

The gold price edged higher on Tuesday (September 19) as investors awaited a two-day US Federal Reserve meeting that could provide hints on future monetary policy.

Talk of monetary tightening and a bounce in the dollar put gold on the defensive.

U.S. 10-year Treasury yields, which edged up on Tuesday, retreated slightly.

The Dow Jones industrial average .DJI rose 39.45 points, or 0.18 percent, to end at 22,370.8, the S&P 500 .SPX gained 2.78 points, or 0.11 percent, to 2,506.65 and the Nasdaq Composite .IXIC added 6.68 points, or 0.1 percent, to 6,461.32.

Meanwhile the key short-term support levels to watch include 0.9590, 0.9505 and then that 0.9445 level.

Copper for December delivery closed down 1.2% at $2.9345 a pound.

Oil prices rose almost 2 percent on Wednesday, despite a rise in USA crude inventories, with the market heading for its largest third-quarter gain in 13 years after the Iraqi oil minister said OPEC and its partners were considering extending or deepening output cuts.

Brent crude futures rose to a five-month high of $56.48 a barrel and last stood at $56.16.

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