Dollar hits multi-month high against yen as U.S. yields climb on inflation bets

The dollar rose on Wednesday, reaching a four-month high against the Japanese yen as U.S. bond yields rose amid hopes for economic recovery and faster inflation. 

The dollar index bounced to 90.681, back from a three-week low of 90.117 hit on Tuesday. A rise in U.S. bond yields also supported the dollar, with the 10-year yield gaining 0.131% from last week.

The dollar briefly rose to a four-month high of 106.225 against the yen, before settling at 106.13. The euro dipped to $1.2085, though its fall was less noticed due to its gains on Tuesday.

The upbeat market mood on U.S. economic outlook is generally boosting risk-sensitive currencies. 

The pound firmed at $1.3863 after hitting its strongest level since April 2018 on Tuesday. Against the euro, it rose to 87.07, its highest level since May. 

The Aussie traded at $0.7734, while the Chinese yuan sat at 6.4269 in offshore trade.