Investing.com - The dollar edged higher against a currency basket on Tuesday and the safe haven yen remained steady in cautious trade as rising U.S. bond yields and concerns over the outlook for global growth weighed on risk appetite.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.17% to 95.60 by 03:57 AM ET (07:57 AM GMT), not far from a six-week high of 95.78 reached last week.
Demand for the dollar was underpinned as the move higher in U.S. Treasury yields continued, albeit at a slower pace than last week, sending the yield on 10-year Treasury notes to a fresh seven-year peak.
The sell-off in Treasuries has been spurred by expectations for a potentially faster pace of rate hikes from the Federal Reserve. Rising bond yields have hit demand for stocks in recent sessions, souring risk appetite.
The safe haven yen was holding steady against the dollar, with USD/JPY at 113.30 as investors also focused on the economic impact of the U.S.-China trade war and worries over the political situation in Europe.
The International Monetary Fund cut its global growth forecast on Tuesday, warning that trade conflicts are starting to have a serious impact on the global economy.
The IMF downgraded its outlook for the U.S., China, the euro zone and the UK, saying it now expects the global economy to expand by just 3.7% in 2018 and 2019, down from 3.9% before.
The euro was hovering near last week’s one-and-a-half month lows, with EUR/USD slipping 0.14% to 1.1475 amid worries that the Italian government’s spending plans could trigger another round of the country’s debt crisis.
The single currency was also weaker against the yen, with EUR/JPY at 130.06, within striking distance of Monday’s almost one-month lows of 129.51.
Sentiment on the euro was also hit after data showing that German exports fell unexpectedly in in August, adding to concerns over a loss of momentum in the euro area’s largest economy.
Sterling was a touch lower, with GBP/USD dipping 0.11% to 1.3075 amid ongoing uncertainty over what sort of deal Britain will secure before its exit from the European Union .