(Bloomberg) — A dollar headed for the highest close in more than a decade amid speculation the Federal Reserve is the only developed-nations’ central bank considering raising interest rates this year.
The U.S. currency gained versus most of its 16 major counterparts as the fewest Americans in almost 15 years filed applications for unemployment benefits. The Fed maintained its pledge on Wednesday to be “patient” on the pace of future rate gains. Australia’s and New Zealand’s currencies weakened, along with Turkey’s lira, amid speculation the nations’ central banks may be moving toward cutting interest rates. The rand pared losses as South Africa’s central bank held rates steady.
“The growth numbers are good, the jobs reports are doing very well,” said Georgette Boele, a currency strategist at ABN Amro Bank NV in Amsterdam. “That the European Central Bank will do that massive quantitative easing — that is a negative force” that contrasts with the Fed’s probable rate hike later this year, she said.
The Bloomberg Dollar Spot Index, a gauge of the currency’s performance against 10 major peers, rose 0.2 percent to 1,163.09 as of 8:58 a.m. New York time. It closed at 1,161.42 on Jan. 26, the highest in data going back to 2004.
The dollar gained 0.4 percent to 117.95 yen. It declined 0.3 percent to $1.1309 per euro after reaching $1.1098 versus the common currency on Jan. 26, the strongest level since September 2003. The yen weakened 0.6 percent to 133.54 per euro.
ABN forecasts the euro will fall to $1.10 by the end of this year and decline to parity with the dollar by the end of 2016. The median estimates in Bloomberg surveys are for $1.12 at the end of this year and next.
Measures of volatility have jumped in currency markets this year as central banks from Canada to Singapore roiled markets with surprise monetary policy easing.
The euro plunged last week as the European Central Bank introduced a bond-buying program that was bigger than analysts anticipated, while money markets rates show Bank of England officials, who were last year forecast to increase interest rates before the Fed, will keep U.K. borrowing costs at record lows this year.
JPMorgan Chase & Co.’s global gauge of currency price swings climbed to as high as 11.68 percent this month, the most since June 2013, and was 10.88 percent in London Thursday.
The Aussie weakened to the lowest in more than five years with swaps traders seeing 66 percent odds the Reserve Bank of Australia will cut borrowing costs on Feb. 3, setting aside the report on Wednesday that showed underlying quarterly inflation accelerated. The currency fell 1.3 percent to 77.90 U.S. cents and reached 77.74, the lowest since July 2009.