The US dollar climbed on Thursday to its highest level in 19 months against major currencies, supported by growing expectations of an increase in US interest rates. Meanwhile, the Japanese yen approached the 160-per-dollar level following dovish remarks from a Bank of Japan policymaker.
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Traders increased their bets on higher US interest rates after October inflation data came in above expectations, alongside a series of hawkish statements from Federal Reserve officials. They expressed concern over persistent inflation while leaving the door open to the possibility of raising interest rates by 50 basis points.
Some major investment banks, including Goldman Sachs, expect another rate increase early next year, in addition to an anticipated hike in December.
The US Dollar Index, which measures the greenback against a basket of currencies, rose 0.15% to 103.02, its highest level since April 2025.
Against the yen, the dollar reversed an earlier downward trend, gaining 0.04% to 159.83 yen, supported by wide interest rate differentials as traders increasingly expect the Federal Reserve to tighten monetary policy. The dollar had earlier reached its highest level in more than two months on Thursday.
Bank of Japan board member Toyoichiro Asada opposed calls for an immediate interest rate increase, saying in a speech that taking such a step prematurely could harm economic growth and lead to a decline in underlying inflation.
Asada was one of two policymakers who supported monetary easing and opposed September's decision to raise borrowing costs to 1.25%.
Many analysts surveyed by Reuters expected the Bank of Japan to raise interest rates next month. This view gained further support on Thursday after data showed that Japan's annual wholesale price inflation accelerated again to 7.1% in the year to October, up from an annual increase of 6.8% in September.
The euro rose 0.06% to $1.1096, while the British pound fell 0.1% to $1.3266.
The Australian dollar was little changed at $0.6847, while the New Zealand dollar declined 0.05% to $0.5559.
In cryptocurrency markets, Bitcoin fell 0.63% to $73,848.24, while Ether declined 0.49% to $2,058.18.
Source: Reuters
