The U.S. dollar climbed to a fresh one-month high against major peers on Friday as Federal Reserve officials continued to talk up the need for further interest rate hikes ahead of their key Jackson Hole symposium.
The dollar index rose 0.14% to 107.63, after earlier touching 107.72, its highest since July 18. The gauge is on track for a 1.86% rally this week, which would be its best weekly performance since June 12.
The greenback rose to 136.38 yen, its highest since July 28 and on track for a 1.99% weekly rise, its best showing since June 10.
Meanwhile, the euro dipped to $1.0070, the weakest since July 15. Sterling sank to $1.1895, its lowest since July 21.
St. Louis Fed President James Bullard said he is leaning toward supporting a third straight 75-basis-point interest rate hike in September, while San Francisco Fed colleague Mary Daly said hiking rates by 50 or 75 basis points next month would be "reasonable."
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Kansas City Fed President Esther George said she and her colleagues will not stop tightening policy until they are "completely convinced" that overheated inflation is coming down.
The dollar is "smartly higher" with central bank officials "all making clear the Fed still has work to do raising rates," even as they differed on by how much, Ray Attrill, the head of currency strategy at National Australia Bank (OTC:NABZY) in Sydney, wrote in a client note.
"It's hard to pin European currency weakness on specific news, albeit the case for more weakness on relative (global) economic grounds has been blindingly obvious for weeks."
The euro is on course to decline 1.73% since last Friday, which would be its worst week since July 8. Sterling is set for a 1.85% drop, its biggest weekly tumble since May 6.
European currencies failed to get a lift from renewed inflation fears putting pressure on regional central banks to keep tightening policy, with investors instead worrying about the risks of recession.
European Central Bank board member Isabel Schnabel fueled inflation worries overnight by saying consumer prices could still accelerate in the short-term. British price growth hit double digits, data showed on Wednesday.
Meanwhile, despite the Fed chorus on the need for higher rates, the odds of another supersized 75 basis point hike next month have receded to 40% in money markets.
However, consumer price inflation and jobs data for August, due before the Fed's September meeting, will likely affect the scale of tightening.
Fed Chair Jerome Powell will have a chance to update the market on his views at the annual Jackson Hole symposium on Aug. 25-27.
Elsewhere, the Australian dollar slipped as low as $0.6888, the lowest since Aug. 5. The New Zealand dollar dipped to $0.62285, also the lowest since Aug. 5.
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China's yuan slipped to a three-month low of 6.8150 per dollar in onshore trading after the central bank set a much-weakened midpoint guidance, with traders expecting further downside due to an economic slowdown.
"The USD/CNY fix today above 6.80 was the highest this year and suggests that the PBOC will not cap its gains in the face of the climbing USD," Alvin Tan, a strategist at RBC Capital Markets.
In cryptocurrencies, bitcoin fell 1.67% to $22,814, on track for a 6.22% weekly slide, its worst since July 3. Ether was down 1.54% to $1,818.60, headed for a 6.02% weekly drop, also the worst since the start of last month. - Investing
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