Dollar Rises to One-Year High, U.S. Markets Closed for Holiday

By Dow Jones Newswires Staff

The dollar hit a one-year high as investors continued to digest the increased likelihood of higher U.S. interest rates following Wednesday's Federal Reserve meeting.

Federal Reserve policymakers sounded an increasingly hawkish tone, supporting the greenback and sparking a pullback from non-yielding precious metals.

Brent crude oil rose back above $80 a barrel after Vice President JD Vance called off plans to travel to Switzerland for peace talks with Iran. Though oil tanker traffic through the Strait of Hormuz is restarting, concerns around the long-term settlement between the U.S. and Iran and the conditions of shipping through the crucial waterway remain.

In the U.K., gilt yields rose and the pound weakened against the dollar after Labour politician Andy Burnham won a special election, giving him a seat in Parliament from which he can challenge the leadership of Prime Minister Keir Starmer.

U.S. markets are closed for the Juneteenth holiday. Trade in U.S. Treasurys and stocks resumes Monday.

--Brent crude rose 0.5% to $80.23 a barrel, while WTI was up 1.25% to $77.56 a barrel. Vice President JD Vance had been set to oversee a ceremonial deal signing with Tehran. "Market euphoria that a deal had been reached has shifted to some skepticism, as the deal is only interim and is not a peace treaty," XTB's Kathleen Brooks said. Oil trade is likely to be choppy Friday, as the increased flow of oil through the Strait of Hormuz jostles with concerns around the terms of peace, Brooks adds. Both benchmarks remain on track for sharp weekly declines.

--The Nikkei Stock Average rose 0.3% to close at a fresh record high of 71250.06 amid risk-on sentiment. Korean stocks reversed rises earlier in the session to close down, with the Kospi losing 0.1%. Markets in Hong Kong and China are closed for holidays.

--European indexes were mixed as defense stocks rallied and miners slipped in thin opening trade. The Europe-wide Stoxx 600 as flat. London's FTSE 100 edged 0.1% lower on slipping metals miners. In Paris, the CAC 40 rose 0.2% as autos rally and luxury giant LVMH gained 1.7%. Germany's DAX was up 0.15%, as defense giant Rheinmetall jumped 1.6%. Italy's FTSE MIB gained 0.55%, thanks in part to defense company Leonardo, which rose 3.1%. Autos also gained, with Ferrari up 1.2%. Basic materials stocks dragged the Spanish IBEX 35 down 0.1%. The semiconductor heavy AEX slipped 0.4%, dragged by ASML--Europe's most valuable company--falling 1.7%.

--The dollar rose to a one-year high against a basket of currencies, supported by expectations the Federal Reserve could raise interest rates this year. The Fed on Wednesday left rates unchanged as expected but its latest projections suggested a rate rise was possible by year-end. New Fed Chair Kevin Warsh also emphasized policymakers were committed to bringing inflation back to the 2% target. The recent decline in oil prices due to the U.S.-Iran interim peace deal has lowered rate expectations for most currencies but this doesn't apply to the Fed, Commerzbank's Volkmar Baur said in a note. The DXY dollar index rose to a high of 101.127.

--Eurozone government bond yields rose in opening trade. The 10-year Bund yield traded up 3.7 basis points to 2.957%, according to Tradeweb.

--Yields on U.K. government bonds climbed following higher-than-expected public sector borrowing data and after Andy Burnham--a potential challenger to Keir Starmer in a Labour Party leadership contest--won a special election. U.K. public borrowing for May climbed to 23.3 billion pounds, 5.4 billion pounds higher than in May 2025. "Borrowing has got off to a terrible start to the fiscal year 2027," Pantheon Macroeconomics' Rob Wood said in a note. At the same time, Burnham's victory increases both political and fiscal uncertainty. Markets are concerned that he would favor increased government spending. Ten-year gilt yields rose 6.5 basis points to last trade at 4.809%.

--Bitcoin dropped 0.5% to $62,732.

--Gold extended losses as investors continue to respond to U.S. Federal Reserve officials' more hawkish tone. A higher interest rate environment typically weighs on non-yielding assets like bullion. In early trading, New York futures are down 1.8% to $4,170.30 a troy ounce. "Gold is likely to remain under pressure in the near term as geopolitical risk premiums continue to fade and higher for longer interest rate expectations strengthen," MUFG's Soojin Kim wrote in a note. However, continued uncertainty around the pace of normalization for shipping through the Strait of Hormuz will limit downside risk for gold, the analyst said.

Write to Barcelona Editors at barcelonaeditors@dowjones.com

(END) Dow Jones Newswires

June 19, 2026 04:48 ET (08:48 GMT)