SINGAPORE : The dollar and sterling were buoyant on Wednesday, after a surprise rebound in business activity in the United States and the UK raised the likelihood that their respective central banks would have further to go in raising interest rates.
The dollar rose against most major currencies after the upbeat data save for sterling, which jumped 0.6 per cent on Tuesday. It was last 0.05 per cent lower at $1.2107. "It was kind of an issue of relativities in a sense, that while the services sectors performed better across the board, that extra lift that sterling got, was because of that very, very strong performance," said Rodrigo Catril, senior currency strategist at National Australia Bank.
Markets have since raised their expectations of how high the Federal Reserve would need to lift rates to tame inflation, sending U.S. Treasury yields surging.