New York - The greenback is stampeding toward its strongest in at least a decade as traders reestablish bets on US policy divergence from global stimulus.
Commodity currencies are in the line of fire as New Zealand’s central bank meets July 22 to weigh further easing after its Canadian counterpart cut rates this week.
“There’s more upside to the dollar,” said Omer Esiner, chief market analyst at the currency brokerage Commonwealth Foreign Exchange in Washington.
“There may be a bigger reaction when the rate hike actually comes than what the market is thinking.”
The Bloomberg Dollar Spot Index, which tracks the US currency versus 10 major peers, rose for a fourth week, adding 1.6% to 1 208, a three-month high. The measure is 1.2% below a 10-year high touched in March.
The greenback climbed 3% from a week earlier, the biggest move in eight weeks, to $1.0830 per euro. It rose 1.1% versus the yen, the first gain in three weeks.
The dollar advanced versus 14 of its 16 major peers this week after Federal Reserve chair Janet Yellen indicated policy makers would look to raise interest rates by year-end. The US central bank is weighing incoming data for signs the economy can withstand the first rate increase since 2006.
“If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate target,” Yellen said in testimony before Congress.