Dollar stands tall as traders brace for tapering

 Dollar stands tall as traders brace for tapering

Euro, Hong Kong dollar, U.S. dollar, Japanese yen, pound and Chinese 100 yuan banknotes are seen in this picture illustration, January 21, 2016. REUTERS/Jason Lee/Illustration

SINGAPORE, Sept 29 (Reuters) – The dollar traded near its highest levels of the year on Wednesday, after driving higher with U.S. yields and benefiting from investor nervousness about the Federal Reserve starting to withdraw policy support just as global growth headwinds gather.

The dollar rose broadly overnight to lift the dollar index to an 11-month high of 93.805. It was marginally below that level early in the Asia session at 92.728.

U.S. Treasury yields have surged – with benchmark 10-year rates up 25 basis points in five sessions to 1.5548% – as Fed tapering looms before the year’s end and as inflation starts to look stickier than first thought.

The Japanese yen , which is sensitive to U.S. yields as higher rates can draw flows from Japan, has fallen about…

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