Dollar climbs

TOKYO: The dollar held near a 3-1/2-month high against a basket of currencies, as higher U.S. yields prompted an unwinding of short positions in the currency while the euro was hampered by a dovish tone from the European Central Bank.

The dollar´s index against six major currencies on Thursday hit a high of 91.639, its strongest level since mid-January, as investors have warmed to the greenback thanks to attractive Treasury yields.

It last stood at 91.527.In Japan, the yen was little changed after the central bank´s policy decision at which it kept settings unchanged.

The benchmark 10-year U.S. Treasuries had hit the psychologically important three percent mark on combination of worries about inflation and increased debt supplies as a result of President Donald Trump´s tax cuts and spending plans.

Earlier this year, the correlation between U.S. yields and the dollar had broken down as investors focused more on trade frictions and geopolitical issues, with currencies largely driven by Trump´s tweets than by economic data and yields. But so far this week, the markets have turned their attention to interest rate plays, pushing concerns over U.S.-China trade on the back burner for now.