Dollar hits 13-month highs as investors bank on rate hikes

By Amanda Cooper

LONDON, June 25 (Reuters) - The dollar headed connected Thursday for its biggest monthly summation successful astir a year, up of U.S. ostentation information that could enactment galore investors' increasing content that the ‌Federal Reserve volition request to rise rates astatine slightest erstwhile this year.

The dollar deed a 13-month precocious against ‌the euro connected Wednesday, leaving the azygous European currency beneath $1.14. It besides sent the lb to seven-month lows and kept the Japanese yen astir its ​weakest successful 40 years, astir 161.9.

Dollar spot has pushed golden concisely beneath $4,000 an ounce for the archetypal clip successful much than 7 months and sent bitcoin nether $60,000 for the archetypal clip since 2024.

The dollar index, which measures the U.S. currency against a handbasket of six others, was astir 101.5 connected Thursday, aft touching a 13-month highest of 101.8 the erstwhile day.

Traders who earlier the ‌U.S.-Israeli warfare connected Iran had expected the Fed ⁠to chopped rates this year, present spot 1 hike arsenic soon arsenic October and a 50/50 accidental of a 2nd by year-end.

This period alone, 2-year U.S. Treasuries, which way short-term complaint expectations, ⁠have risen 14 ground points to 4.16%, compared with conscionable a 2-bp emergence successful benchmark German 2-year yields to 2.56% and a near-9 bp autumn successful UK gilt yields.

MUFG currency strategist Lee Hardman said the rates marketplace was intelligibly reflecting investors' content that the ​Fed ​will "back up pugnacious speech connected ostentation by hiking rates this year".

He ​added, "If the Fed is superior astir restoring terms stability, ‌a important tightening of monetary argumentation volition beryllium required truthful it makes consciousness that much hikes person been priced in, precocious encouraging a stronger U.S. dollar."

U.S. INFLATION DATA AHEAD

Sterling was down 0.1% astatine $1.316, having deed its lowest since past November connected Wednesday astatine $1.314. The dollar retreated against the Swiss franc to astir 0.813 francs, conscionable shy of 11-month peaks.

On the information front, the Fed's preferred measurement of inflation, halfway idiosyncratic depletion expenditures, is owed for May.

Economists polled by Reuters expect a emergence ‌of 3.4%, good supra the cardinal bank's 2% people rate.

"Further USD ​gains volition necessitate further (widening) successful complaint differentials, but successful the abbreviated word ​the corporates request dollars and volition support needing dollars ​for a fewer much days," said Brent Donnelly, president astatine analytics steadfast Spectra Markets.

"My presumption is ‌that this is creating a USD-positive feedback loop wherever (speculators) ​are adding and technicals are ​breaking, and that feedback loop volition astir apt pain itself retired soon."