LONDON—The dollar resumed its relentless rise on Thursday, charting new 24-year highs against the yen and pinning the euro close to parity, as investors bet on the Federal Reserve ratcheting up interest rates to combat soaring inflation.
Global economic turmoil has put a rocket under the safe haven dollar, pushing the dollar index that tracks the greenback against six counterparts up more than 13 percent this year. It was last up 0.3 percent on the day at 108.580.
The dollar strengthened more than 1 percent against the yen, pushing it above 139 yen per dollar for the first time since 1998. It was last up 1.1 percent at 138.92 yen.
The euro was hovering just above parity with the dollar—a day after breaking below the key level for the first time in almost two 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 percent on the day and was last down 0.4 percent at $1.00215.
Another hot set of U.S. 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 U.S. recovery by responding more aggressively to dampen upside inflation risks,” analysts at MUFG said in a note.
Traders have ramped up bets that the U.S. central bank could raise rates by 100 basis points when it meets on July 26–27. A hike of at least 75 basis points is seen as almost certain.
Sterling slipped 0.4 percent to $1.18505, as concerns about prospects for the British economy dominated despite data on Wednesday showing output unexpectedly grew in May.
