US dollar rallies on safe-haven bids, rate cut delay; yen hits 34-year low
The dollar index was on track to post its largest weekly percentage gain since September 2022. It was last up 0.7% at 106.02.
Israel on Friday awaited an attack by Iran or its proxies, as warnings grew of retaliation for the killing last week of a senior officer in Iran's embassy in Damascus. Iran's supreme leader, Ayatollah Ali Khamenei, accused Israel of the killing and said it «must be punished and shall be» for an operation he said was equivalent to an attack on Iranian soil.
«We have a confluence of things happening that are boosting the dollar: geopolitical risk increasing, hawkish data out of the U.S. in terms of inflation and last week's strong employment report,» said Brad Bechtel, global head of FX at Jefferies in New York.
«Geopolitical risk, in particular, is increasing volatility in the marketplace,» he added.
The euro, meanwhile, tumbled to a five-month low against the dollar, after the European Central Bank indicated it could soon cut interest rates. The expectation for the Fed, on the other hand, is that it will keep rates higher until later in the year.
Europe's single currency last traded at $1.0637, down 0.9%, after hitting $1.0622, its weakest since Nov. 3 and was on pace for its biggest weekly percentage drop since late September 2022.
The broad strength in the dollar also sent the yen to a fresh 34-year low as investors remained on the lookout for signs of potential action from Japanese monetary authorities to prop up the currency.
Recent U.S. economic data on the labor market and
