The dollar, on Wednesday, November 23, leaped to a more than 13-year peak, buoyed by upbeat U.S. economic data that showed the economy on track for steady growth and reinforced expectations of interest rate increases by the Federal Reserve next month and in 2017.
The dollar rose more than 1 percent against the yen to 112.36 JPY= ahead of Thursday’s U.S. Thanksgiving holiday. It earlier hit a more than 7-month high of 112.47 yen, Reuters reports.
The greenback also posted sharp gains against the yen, rising to a more than seven-month high, and climbed versus the euro to its highest since early December.
A 0.4 percent rebound in U.S. durable goods orders last month after a decline in September as well as solid U.S. jobless claims that have been below 300,000 for 90 straight weeks boosted the multiple rate hike view.
“Speculation of a December rate hike reached mind-boggling levels,” said Lukman Otunuga, research analyst at Forex Time Ltd (FXTM) in Croydon, England. “This could ensure dollar strength remains a key theme moving forward.”
Markets are now pricing in a nearly 100 percent probability of a December Fed rate increase, according to CME FedWatch.
In mid-morning New York trading, the dollar index .DXY, which tracks the greenback against six major currencies, rose 0.7 percent to 101.73, after earlier soaring to a 13-1/2 year peak of 101.78.
It has climbed more than 3 percent since President-elect Donald Trump’s victory two weeks ago.
Investors are betting the dollar will be strengthened by Trump’s plans for fiscal stimulus, which may drive the Fed to raise rates faster than had been anticipated because of increased inflation.
