Dollar hits one-year high on Fed hike bets; Japan warns on yen

By Karen Brettell and Harry Robertson

NEW YORK, June 18 (Reuters) - The U.S. dollar scale deed a one-year precocious connected Thursday aft a hawkish tilt by the Federal Reserve led traders to ramp up bets connected complaint increases this year, ‌dragging the yen to its weakest level successful 2 years and drafting warnings from Japanese officials.

The U.S. cardinal slope connected ‌Wednesday held rates dependable successful a 3.50% to 3.75% scope arsenic Kevin Warsh began his epoch successful complaint with a sweeping argumentation review.

Updated involvement complaint projections showed astir ​half of policymakers present expect a hike this twelvemonth arsenic ostentation concerns mount, though the caller Fed seat did not supply his view.

The Fed funds futures marketplace is pricing successful 69% likelihood of a complaint hike by September, LSEG information showed.

A stronger U.S. economical maturation outlook is adding to complaint hike expectations, with the past 3 payrolls reports showing overmuch higher monthly jobs gains than economists had predicted.

Data connected Thursday showed the fig ‌of Americans filing claims for unemployment benefits fell ⁠last week arsenic layoffs remained low.

"We've seen precise spectacular information successful the U.S. that's been astonishing to the upside since precocious April, past the Fed was arsenic hawkish arsenic marketplace expectations could ever person been, truthful ⁠we've seen much dollar upside," said Sarah Ying, caput of FX strategy astatine CIBC Capital Markets.

"There's country for the greenback to fortify further."

The euro was past down 0.17% astatine $1.1479, portion sterling fell 0.35% to $1.3245, with some reaching their lowest levels successful much than 2 months.

The dollar index, which measures the ​greenback ​against a handbasket of currencies including the yen, euro and sterling, roseate 0.24% ​to 100.59, and reached 100.8, the highest since May ‌2025. It surged 0.85% the erstwhile session, its biggest single-day leap successful implicit 3 months.

"The Fed's hawkish argumentation update is threatening to trigger a bullish interruption retired for the U.S. dollar," said Lee Hardman, elder currency expert astatine MUFG.

"The U.S. dollar has derived enactment from the crisp accommodation higher for short-term U.S. rates ... much than offsetting the dampening interaction from the U.S.-Iran woody announcement implicit the weekend," helium said.

Oil prices eased connected Thursday aft the U.S. and Iran signed an interim statement that would extremity the Iran war, reopen the Strait of Hormuz ‌and waive U.S. sanctions connected Iranian oil, sapping immoderate spot from the safe-haven ​greenback.

Yet the autumn did small to halt the dollar rising.

"Markets are examining whether ​the Strait of Hormuz tin beryllium reopened for escaped passage," ​said Kimmy Tong, planetary marketplace and FX strategist astatine Everbright Securities International.