Dollar soars as Powell assured of second term

The U.S. dollar climbed to an almost four-and-a-half-year high against the Japanese yen on Tuesday. The greenback rose following U.S. Federal Reserve Chair Jerome Powell’s reappointment for a second term, boosting bets on higher U.S. interest rates.

The dollar touched 114.8 yen after a 0.77% increase on Monday, approaching the previous week’s high of 114.97, the safe-haven currency’s highest since 2017.

The yen is susceptible to movements in the U.S. Treasury notes, and two-year U.S. Treasury yields went up 8.5 basis points on Monday to their highest since early March in the previous year.

Powell was chosen by U.S. President Joe Biden over Lael Brainard, the other leading candidate. Brainard, considered by markets to be more dovish, will be the Fed’s vice-chair.

The news bolstered market expectations of increases in rates in the coming year after the Fed finishes tapering its emergency bond-buying program.