US dollar climbs further, pinning euro, yen at multi-decade lows

THE US dollar resumed its relentless rise on Thursday (Jul 14), charting new 24-year highs against the yen and pinning the euro close to parity, as investors bet on the US Federal Reserve ratcheting up interest rates to combat soaring inflation.

Global economic turmoil has put a rocket under the safe-haven US dollar, pushing the dollar index that tracks the greenback against 6 counterparts up more than 13 per cent this year. It was last up 0.3 per cent on the day at 108.580.

The greenback strengthened more than 1 per cent against the yen, pushing it above 139 yen per US dollar for the first time since 1998. It was last up 1.1 per cent at 138.92 yen.

The euro was hovering just above parity with the US dollar — a day after breaking below the key level for the first time in almost 2 decades.

The single currency remained under pressure on Thursday, weighed by downgraded official economic forecasts for the eurozone and political strife in Italy.

The euro fell as much as 0.5 per cent on the day, and was last down 0.4 per cent at $1.00215.

Another hot set of US inflation data on Wednesday and an aggressive 100 basis point rate hike by the Bank of Canada on the same day has stoked bets on swifter policy tightening by the Fed, currency analysts said.

“The price action reflects building fears that the Fed will strangle the life out of the US recovery by responding more aggressively to dampen upside inflation risks,” analysts at MUFG said in a note.

Traders have ramped up bets that the US central bank could raise rates by 100 basis points when it meets on Jul 26-27. A hike of at least 75 basis points is seen as almost certain.

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Euro comes close to parity with the dollar, at new 20-yr low

Rampant dollar hits new 24-year peak on the yen

Sterling slipped 0.4 per cent to US$1.18505, as concerns about prospects for the British economy dominated despite data on Wednesday showing output unexpectedly grew in May. REUTERS