The dollar rose to the strongest in almost a year against the euro amid speculation the Federal Reserve will raise interest rates in 2015, while the European Central Bank signaled additional measures to support growth.
The U.S. currency climbed versus most of its major peers as a Fed measure of the nation’s economy expanded more than forecast last month. The euro slid after ECB President Mario Draghi said inflation expectations have declined, in remarks at a conference in Jackson Hole, Wyoming, where Federal Reserve Chair Janet Yellen said jobs gains may mean the U.S. central bank will raise interest rates sooner than anticipated. Sweden’s krona fell to a two-year low.
“There’s a heavily ingrained view that the dollar should be stronger, against the euro specifically,” Douglas Borthwick, the head of foreign exchange at New York brokerage Chapdelaine & Co., said by phone. “It’s a continuation from what we saw last week with Yellen and Draghi. The market is now convinced that the U.S. will move to raise rates, while the ECB moves to cut rates by some sort of quantitative easing.”