The dollar rose the most in a week as the prospect of U.S. military action against Syria deterred risk-taking and prompted investors to buy the safest assets.
The Australian dollar fell against most of its 16 major peers and India’s rupee and Turkey’s lira dropped to record lows as the prospect of an expanded Middle East conflict damped demand for emerging-market currencies. U.S. Treasury 10-year note yields climbed from the lowest level in almost two weeks before a government report tomorrow forecast to show the economy grew more last quarter than earlier estimated.
“Because of geopolitical risk, market sentiment was pretty bad, but this type of risk is not so important on a longer-term horizon,” said Yoshitsugu Fujita, an assistant vice president of global markets in New York at Sumitomo Mitsui Trust Bank Ltd. Rises in Treasuries yields have contributed to strength in the U.S. dollar, he said.
The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major peers, advanced 0.4 percent to 1,028.54 as of 2:34 p.m. in New York. It earlier advanced 0.5 percent, the biggest intraday increase since Aug. 21.
The greenback strengthened 0.7 percent to 97.75 yen, its first gain in three days. It rose 0.5 percent to $1.3333 per euro. Japan’s currency declined 0.3 percent to 130.31 per euro.
Benchmark 10-year yields climbed seven basis points to 2.78 percent after falling to 2.70 percent, the lowest since Aug. 15.
Turkey’s lira sank to a record on concern Turkey will be hurt by a military action against its neighbor Syria. Some 4,000 Syrians have sought refuge in Turkey in the past five days on fears of a chemical attack, state-run TRT television said.
The lira was little changed at 2.0356 per dollar after depreciating to 2.0730, a record according to data compiled by Bloomberg since 1981. India’s rupee fell as much as 4 percent to 68.845 against the U.S. currency. The Aussie slumped 0.5 percent to 89.44 U.S. cents, and touched 88.93 earlier, the weakest level since Aug. 5.
“The broader theme is reduced risk appetite -- you can see that in emerging-market currencies and the Aussie,” Robert Sinche, global strategist at Pierpont Securities Holdings LLC in Stamford, Connecticut, said in a telephone interview. Strength in the U.S. dollar is “related to U.S. interest rates coming back a little bit.”
JPMorgan Chase & Co.’s Global FX Volatility Index climbed to 10.39 after reaching 10.51, the highest since July 16.
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