The dollar rose to a new 10-month peak on Tuesday as U.S. bond yields hit their highest level since October 2007, while the Japanese yen recovered from an early dip, with traders on alert for signs of government intervention.

Federal Reserve policymaker Neel Kashkari said on Monday that, given the strength of the U.S economy, interest rates should probably rise again and be held "higher for longer" until inflation falls back down to 2%.

His comments helped push up the yield on the 10-year U.S. Treasury - the benchmark U.S. yield that sets the tone for borrowing costs around the world - to 4.566% on Tuesday. Bond yields move inversely to prices.

Higher U.S. yields boosted the allure of the greenback, pushing the dollar index to 106.2, the highest since late November 2022. The index, which tracks the currency against six major peers, was last up very slightly at 105.96.

The euro was last up 0.1% against the dollar at $1.0596, having hit its lowest since March at $1.057 earlier in the session.

Elsewhere, the British pound slid to its lowest level since mid-March at $1.2168 and was last down 0.19% at $1.219. It follows the BoE's decision to hold rates at 5.25% last week and a spate of bad economic data.

Tuesday marks a year since the pound crashed to a record low of $1.0327 against the dollar after then-Prime Minister Liz Truss's disastrous budget.

The Swiss franc also fell to its lowest since March at 0.915 francs to the dollar, having slid since the Swiss National Bank unexpectedly kept interest rates on hold last week.

Source: Reuters