The U.S. dollar index climbed to a fresh 13-month high on Wednesday, reaching 101.44 as a broad sell-off in technology shares drove investors toward the world’s primary safe-haven currency.
Growing expectations of Federal Reserve rate hikes added to the greenback’s strength. Markets now see a 37% chance of a quarter-point rate increase in July, up from 8.5% a week ago, and a 70% probability for September.
The euro weakened to $1.1375, near a one-year low, while the British pound slipped after a Bank of England policymaker suggested an extended hold on rates was appropriate. The risk-sensitive Australian dollar held steady ahead of local inflation data, and the New Zealand dollar touched a fresh seven-month low.
The Japanese yen remained under heavy pressure, trading at 161.57 after briefly touching a two-year low of 161.93. A break above 161.96 would mark the yen’s weakest level since 1986. Verbal warnings from Japanese officials did little to arrest the slide, and a former Bank of Japan board member warned the yen could weaken to 165 if the Fed raises rates this year.
Adding to the safe-haven bid, the U.S. and Iran appeared at odds over key aspects of their fragile peace framework, including nuclear issues and control of the Strait of Hormuz.