The dollar resumed its continuous rise on Thursday, charting new 24-year peak against the yen and pinning the euro close to parity, amid investors' bet on the Fed Reserve ratcheting up interest rates to combat rising inflation.
The safe haven dollar has been rocketed by the current state of the world economy, up more than 13 percent this year, pushing it above 139 yen per dollar for the first time since 1998.
After falling below the crucial level for the first time in nearly two decades the day before, the euro was hovering barely above parity with the dollar.
The single currency remained under stress on Thursday, weighed by downgraded official economic predictions for the eurozone and political strife in Italy. The euro declined as much as 0.5% on the day and was last down 0.4% at USD1.00215.
There have been wagers placed on the Federal tightening policy more quickly after another hot set of U.S. inflation statistics on Wednesday and an aggressive 100 basis point rate hike by the Bank of Canada the same day, as per currency analysts.
Traders have increased their wagers that the Federal Reserve will increase interest rates by 100 basis points at its meeting on July 26–27. It is believed that a rise of at least 75 basis points will occur.
Despite data on Wednesday showing that output unexpectedly increased in May, fears over the future of the British economy prevailed, and the pound fell 0.4 percent to USD1.18505.
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FOREX-Dollar supported by its safe-haven status over recession risks