Dollar falls on rising Treasury yields The dollar regained some poise against sterling on Friday after late gains in the previous session took the UK currency to a two-month high against the US currency. Late in the US session on Thursday the dollar lost ground after data supporting the case for the Federal Reserve to begin tapering its asset purchases in September drove a sell-off in the Treasuries and equities markets. The dollar gained 0.1 per cent against sterling on Friday to $1.5633. But earlier dollar weakness was indicated by sterling gaining 0.9 per cent to $1.5644 on Thursday while the euro climbed 0.7 per cent to $1.3347. Data on Thursday showed that investors in China and Japan led a large sell-off in the US Treasuries market in June following the Fed's initial statements on tapering. The yield on the 10-year Treasury climbed to a two-year high, prompting the biggest sell-off in the US equity market since late June. As far as the dollar is concerned, Lee Hardman at Bank of Tokyo Mitsubishi UFJ said higher Treasury yields would eventually help support a stronger dollar. "But with US yields also pushing other global yields higher, it will result in more challenging external financing conditions, placing further downward pressure on countries with high current account deficits," said Mr Hardman. Among the currencies most at risk, the Indian rupee fell 0.4 per cent against the dollar on Friday to Rs61.7063, having reached a new record low. The Turkish lira fell 0.2 per cent to TL1.9363. Sterling was up 0.9 per cent over the week after positive labour market and retail sales data. Also supporting sterling this week was speculation over the timing of the next rise in UK interest rates, its first since July 2007 when the Monetary Policy Committee voted 6-3 in favour of a 25 basis point increase to 5.75 per cent. The Bank of England said last week it would not consider a move until the unemployment rate fell to 7 per cent, unless rising inflation expectations or financial stability posed threats. It estimated the 7 per cent level would be reached sometime in the second half of 2016. Markets, however, have increasingly priced in the likelihood - given recent stronger than expected data - that the rate of unemployment will reach this level sooner or inflation will pose a threat before the 7 per cent level is reached. The pound was down 0.1 per cent against the euro on Friday but was up 0.7 per cent over the week to £0.8541. The euro was flat against the dollar at $1.3350 and remained flat over the week.