The dollar maintained its strength in early Asian trading on Thursday, reaching near a one-month high against major currencies. This rise was fueled by growing expectations of a Federal Reserve rate hike, with the dollar index climbing 0.63% to 102.85, its highest level since October 14. Traders increased their bets on further Fed tightening following stronger-than-expected October inflation data and hawkish remarks from US central bank officials, who left open the possibility of a larger 50-basis-point increase. Major brokerages, including Goldman Sachs, now anticipate another rate hike early next year, in addition to one in December.
The euro rose 0.09% against the US dollar to $1.1099, while sterling traded at $1.328. The Australian dollar edged down 0.03% to $0.6845, and New Zealand’s kiwi inched up by 0.04% to $0.5564. Against the Japanese yen, the dollar softened 0.12% to 159.58 but remained supported by wide interest-rate differentials as traders increased bets on further Fed hikes.
New York Fed President John Williams is set to appear on a panel late Thursday, with his remarks closely watched given his previous views on rate hikes. Gavin Friend, senior markets strategist at National Australia Bank, noted the shift in Fed officials' stance following the hotter-than-forecast October CPI report. Bank of Japan board member Toichiro Asada, a dovish policymaker, is due to deliver a speech and hold a press conference later in the day. Analysts at MUFG Bank suggested that any cautious stance from Asada could highlight the divergence in monetary policy between Japan and the US, potentially leading to further dollar buying and yen selling.
Data from the Bank of Japan showed Japanese wholesale prices rose 7.1% in the year to October, up from a 6.8% annual increase in September. In cryptocurrencies, bitcoin fell 0.59% to $73,876.57, and ether declined 0.78% to $2,052.27.