The U.S. dollar saw a notable increase, reaching a near one-week high against a basket of currencies, as investors turned away from riskier assets following lackluster corporate results and a rise in Treasury yields, CNBC reports.

The strengthening of the dollar was driven by a decrease in appetite for risk, with concerns over the economic outlook stemming from underwhelming revenue estimates in tech giant Alphabet's cloud division and the decline of other mega-cap stocks. Rising U.S. Treasury yields further fueled the dampening of risk sentiment.

The dollar index, which measures the strength of the dollar against six major currencies, climbed by 0.3%, reaching 106.5, its highest level in nearly a week. Shaun Osborne, the Chief Foreign Exchange Strategist at Scotiabank, attributed the upward trend to weak risk appetite, stating, "I think it is mainly a risk backdrop story."

Alongside the strengthening of the dollar, benchmark U.S. 10-year Treasury yields experienced a slight increase, resuming a move towards a 16-year peak of 5.0%, which was temporarily breached on Monday. The 10-year yield was last recorded at 4.9506%.

While the surge in U.S. bond yields played a significant role in driving the dollar index to its highest level in almost a year, analysts believe there may be limited room for further gains in both yields and the dollar. "My inclination is to look at these gains as an opportunity to fade some of the dollar strength against certain currencies," commented Scotiabank's Osborne.

In other economic news, data released on Wednesday revealed that sales of new U.S. single-family homes soared to a 19-month high in September, accompanied by a drop in the annual median house price - the largest decline since 2009. However, the demand could be curbed by mortgage rates approaching 8%.

Meanwhile, the Australian dollar experienced a significant jump following unexpectedly high inflation figures, triggering speculation about a potential interest rate hike and impacting bond futures. However, the gains were short-lived as the Australian dollar ultimately traded down 0.74% on the day.

The Canadian dollar weakened against its U.S. counterpart after the Bank of Canada maintained its key overnight rate at 5.0% as expected, citing weak growth. However, the central bank left the door open for further rate hikes to combat inflation, which is projected to remain above the target for the next two years. The U.S. dollar rose 0.41% against the Canadian currency.

The Japanese yen remained close to the closely watched 150 threshold, with traders monitoring for any signs of intervention by Japanese authorities. The pressure is growing on the Bank of Japan to adjust its bond yield control mechanism as interest rates rise globally. Reports have emerged suggesting the possibility of an adjustment to the existing yield cap set just three months ago before the upcoming policy meeting next week.

In the cryptocurrency market, Bitcoin recorded a 1.83% increase, reaching $34,539, and maintaining its position near an 18-month high achieved on Tuesday. Speculation surrounding the imminent introduction of an exchange-traded Bitcoin fund has contributed to the cryptocurrency's recent upward surge, with a 15% increase in value throughout the week.

As the dollar continues to strengthen amid fading risk sentiment and rising Treasury yields, market participants will closely monitor further developments in global financial markets and remain alert to potential adjustments by central banks worldwide.