Khaberni - The dollar continued to achieve gains today, Wednesday, reaching its highest level in 13 months against a group of major currencies, amid investors seeking to shelter from the risks of a technology company stock selloff and preparing for the Federal Reserve's (US Central Bank) interest rate hikes.
The instability in the stock market continued following a broad sell-off in the technology and semiconductor sectors, which boosted demand for the dollar and bonds as safe havens.
At the same time, expectations for a US interest rate hike continued to increase, as Federal Reserve officials increasingly adopted a tone leaning towards monetary tightening in light of the ongoing strength of the US economy.
The disagreements between the United States and Iran regarding some key aspects of their framework agreement also led to increased demand for safe-haven assets.
The dollar index - which measures the performance of the US currency against a group of major currencies - rose to 101.69 points, recording its strongest level since May 2025, and the index increased by 0.2% during the day.
Ray Attrill, head of foreign exchange strategy at National Australia Bank, said "The US dollar remains the preferred safe haven," adding "Clearly, the momentum is currently in its favor."
According to the "FedWatch" tool of the "CME" group, the markets see a 36% chance of a US interest rate hike at the Federal Reserve's meeting in July, compared to 9% a week ago.
The likelihood of an interest rate hike in September increased to more than 70% from 29%.
• The euro fell 0.3% to its lowest level in more than a year at $1.134, with the rise of the US currency.
• The British pound slightly dropped to $1.319, and Alan Taylor, a monetary policymaker at the Bank of England, stated that "keeping interest rates unchanged for a longer period" is the right response to inflation pressures.
• The Australian dollar, highly sensitive to risk, declined 0.3% to $0.689, its lowest level since early April, amid mixed inflation data causing uncertainty about expectations for an interest rate hike.
• The Japanese currency traded at 161.69 yen against the dollar, trying to recover some of its gains amid the ongoing strength of the US currency. If it exceeds the level of 161.96, the yen will record its lowest level since 1986.
The latest verbal warnings issued by Japanese officials this week have only limitedly alleviated the ongoing pressure on the currency, and the government plans to improve the management of its foreign reserves totaling $1.3 trillion to intervene in the currency market.
A summary released on Wednesday of the opinions of members of the Bank of Japan's board during the June monetary policy meeting indicated that some called for another interest rate hike, to bring the main interest rate closer to levels considered neutral for the economy.
