Greenback's rally pauses at 11 1/2-year high

London

THE US dollar paused after hitting an 11 1/2-year high against a basket of currencies on Monday, but expectations that the Federal Reserve will raise interest rates soon are likely to underpin the greenback.

Surprisingly strong US jobs data last Friday increased the chances that the Fed will raise rates in mid-year. That pushed Treasury yields higher and widened their gap with government bonds from Japan and the eurozone.

The yield spread fuelled the greenback's rally last week, when the dollar index posted its biggest weekly gains since late 2011. It ran into some profit-taking in Europe on Monday, and the index was last down 0.2 per cent at 97.45. "The dollar has travelled a long way in a pretty short time. US yields have risen but they need another catalyst to move further higher. So until then, we could see some consolidation," said Je…