The US services sector saw activity growth strengthen further last month, with the purchasing managers’ index rising to 57.6 – the highest level since October 2015.
The dollar is boosted by interest rate hike expectations. Currently the markets are pricing in an 80% chance (up from 35% earlier last week and 25% the previous week) that the Federal Reserve will announce another rate hike on 15th March. Speeches from Fed Chair Janet Yellen and Fed Vice Chair Stanley Fischer on Friday are widely expected to bring more clarity with regard to the timing future hikes.
US treasury yields hit their highest level in more than seven and a half years on Thursday. Should the expected rate hikes not materialise, we may see significant volatility as the markets would have to correct what they’re currently pricing in.