The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.63% to 102.85, its highest level since October 14.
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Traders ramped up bets on further Fed tightening after stronger-than-expected October inflation data and a series of hawkish remarks from US central bank officials, who expressed concern over stubborn inflation and left open the possibility of a larger 50-basis-point increase. Some major brokerages, including Goldman Sachs, now expect another hike early next year, in addition to one in December.
New York Fed President John Williams is set to appear on a panel late Thursday that will be closely watched given his “pre-October FOMC meeting views the Fed had time on rate hikes,” said Gavin Friend, senior markets strategist at National Australia Bank, in a note.
“Fast forward two weeks and following a hotter than forecast October CPI report, Fed officials appear to be falling over themselves to talk up rate hikes,” Friend said. “Any guidance from Williams will be seized on.”
The euro was up 0.09% against the US dollar at $1.1099 while sterling traded at $1.328.The Australian dollar edged 0.03% down versus the greenback to $0.6845, while New Zealand’s kiwi inched up by 0.04% to $0.5564.
YEN NEAR PSYCHOLOGICAL 160 LEVEL
Against the Japanese yen, the dollar softened 0.12% to 159.58, though it remained underpinned by wide interest-rate differentials as traders increased bets on further Fed hikes.
Bank of Japan board member Toichiro Asada, one of two dovish policymakers who dissented from September’s decision to increase borrowing costs to 1.25%, is due to deliver a speech and hold a press conference later in the day.
“If Asada signals a cautious stance toward an additional rate hike, the divergence in monetary policy stance between Japan and the US would come into focus, likely resulting in dollar buying compounded by yen selling,” an analyst at MUFG Bank said.
Many analysts in a Reuters poll expect the next BOJ rate hike as soon as next month.
Data from the BOJ on Thursday showed Japanese wholesale prices rose 7.1 percent in the year to October, up from a 6.8 percent annual increase in September.
In cryptocurrencies, bitcoin fell 0.59% to $73,876.57. Ether declined 0.78% to $2,052.27.
