Yellen lifts dollar as markets await Trump tax plan

Weak euro boosts Europe shares after Asian bourses slip after Fed chair comments

Growing expectations that the US Federal Reserve will raise interest rates for the third time this year lifted the dollar yesterday, and European share prices rose as US President Donald Trump’s administration prepared to outline a new tax plan.

Wall Street looked open higher, index showed.

The dollar rose half a per cent to a one-month high against a basket of currencies and yields on interest ratesensitive two-year US Treasury yields touched their highest since 2008 after Fed Chair Janet Yellen said on Tuesday it would be “imprudent” to keep rates on hold until US inflation hit 2 per cent.

Ten-year yields climbed seven basis points to an eightweek high of 2.30 per cent, also pushed higher by the prospect of tax cuts that could increase federal borrowing, analysts said. set to futures

Markets are pricing in a more than an 80 per cent chance the Fed will raise borrowing costs in December, according to the CME Group’s FedWatch tool, up from 72 per cent a week ago. Several other senior Fed officials were scheduled to speak yesterday.

“Yellen’s comments gave more certainty about another rate hike by the end of the year,” said DZ Bank rates strategist Daniel Lenz.

“Further details of Trump’s tax plans and whether this proceeds smoothly will be of interest — it should be a boost to the economy and mean a generally higher bond yield environment.” On the eve of its announcement, Trump said lawmakers should expect a “powerful document” that would cut taxes “tremendously” for the middle class.