Dollar holds near 13-month highs as traders await key U.S. inflation data amid growing rate hike bets

The U.S. dollar held near 13-month highs as traders awaited the Federal Reserve’s preferred inflation gauge, setting the stage for renewed rate-hike bets. The dollar index, which tracks the greenback against six major peers, hit a 13-month peak of 101.8 before slipping to about 101.6. Against the euro, it moved above $1.14, while the dollar reached $1.1325 on Wednesday before stabilizing around $1.1370 in Asian trading. It traded near 161.73 yen, just below a multi-decade peak as the yen weakened. The move follows the Fed’s more hawkish stance than markets expected, with updated projections indicating at least half of policymakers expect rate increases this year. Later Thursday, markets will focus on May core PCE: a 0.3% monthly rise is expected and 3.4% year-on-year, alongside forecasts of 0.5% headline growth and 4.1% annual inflation.