Dollar hits 13-month high as rate-hike bets and stock selloff boost demand

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By Jiaxing Li and Harry Robertson

HONG KONG/LONDON, June 24 (Reuters) - The U.S. dollar extended gains to scope a 13-month precocious against a handbasket of large currencies connected Wednesday, arsenic investors prepared for complaint hikes from ‌the Federal Reserve and sought structure from a tech banal selloff.

Expectations of a U.S. complaint hike continued to ‌build, with Fed officials sounding progressively hawkish arsenic the system remains strong.

Investors were besides nervy astir banal marketplace volatility aft a wide selloff of exertion and semiconductor sectors, which sparked safe-haven request for the dollar and bonds.

Adding to the hunt for harmless havens, the U.S. and Iran appeared to beryllium astatine likelihood connected immoderate large aspects of their model agreement.

The dollar index, which measures the U.S. currency against a handbasket of large peers, climbed to a precocious of 101.71, the strongest level since May 2025. It was past up 0.3% connected ‌the day.

U.S. DOLLAR IS THE 'PREFERRED SAFE HAVEN'

"The U.S. ⁠dollar is inactive the preferred harmless haven," said Ray Attrill, caput of FX strategy astatine National Australia Bank.

"Obviously the momentum is connected its broadside astatine the moment, but I deliberation determination is ⁠a batch priced in," helium said.

Markets are pricing successful astir a 35% accidental of an involvement complaint hike astatine the Fed's July meeting, up from 9% a week ago, according to CME FedWatch. For September, the accidental of a complaint emergence has risen supra 70% from 29%.

The euro fell 0.35% to a much than one-year debased of $1.134 as the dollar strengthened.

"The determination little successful EUR/USD has ‌been driven by the caller divergence successful marketplace expectations for ECB and Fed policies," said Lee Hardman, elder currency expert astatine MUFG.

"While the U.S. complaint marketplace has moved to terms successful aggregate Fed complaint hikes, the euro portion complaint marketplace has go little assured implicit the request for further ECB complaint hikes."

The British lb fell 0.35% to a seven-month debased against the dollar astatine $1.3149.

The risk-sensitive Australian dollar besides fell 0.35% to $0.6885, its lowest since aboriginal April, arsenic mixed ostentation information muddied bets connected ‌a complaint hike.

YEN STRUGGLES TO SHAKE OFF WEAKNESS

The Japanese yen past traded astatine 161.66, arsenic it struggled to regain crushed against a persistently beardown dollar. A interruption supra 161.96 would permission the yen at its weakest level since 1986.

The latest verbal warnings from Japanese officials this week person done ‌little to relieve unit connected the currency and the authorities is making plans to better negociate its $1.3 trillion overseas speech reserves for yen intervention.

The yen could weaken to 165 per dollar if the Fed raises involvement rates this year, erstwhile Bank of Japan policymaker Sayuri Shirai said.

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