The Dollar Resumed Its Relentless Rise
The dollar resumed its steady march on Thursday. It reached new 24-year highs versus the yen and closing in on parity with the euro as investors bet on the Federal Reserve raising interest rates to tackle growing inflation.
The haven dollar has rocketed this year due to global economic uncertainty, with the dollar index. It tracks the greenback against six equivalents, up more than 13 percent. It closed the day up 0.72 percent at 108.74.
The dollar gained more than 1% against the yen, breaking beyond 139 yen per dollar for the first time since 1998. It was the last trading at 138.89 yen, up 1.07 percent.
The euro was slightly above parity with the dollar a day after falling below the crucial threshold for the first time in two decades.
The euro remained under pressure on Thursday, driven by revised eurozone economic predictions and political instability in Italy.
Another scorching set of US inflation statistics on Wednesday, combined with an aggressive 100 basis point rate move by the Bank of Canada on the same day, has fueled expectations of the Fed tightening policy faster.
The price move reflects growing concerns that the Fed would squeeze the life out of the US recovery by responding more aggressively to curb upside inflation risks.
Traders have increased their bets that the US Federal Reserve will raise interest rates by 100 basis points when it meets on July 26-27. A rise of at least 75 basis points as widely expected.
Sterling fell 0.56 percent to $1.1823 as fears about the British economy dominated. However, statistics on Wednesday indicated an unexpected output increase in May. The yen sank to its lowest level versus the dollar since September 1998. Overnight data indicated that US inflation rose to 9.1 percent in June, the strongest rate in more than 40 years and beating the market consensus of 8.8 percent.
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