LONDON—Demand intensified for the safe-haven dollar in European trading hours Wednesday as investors expressed frustration with the deteriorating European debt crisis and dumped the euro and the Australian dollar, while emerging-market currencies came under pressure.
The euro plunged to four-month lows against the dollar to trade at $1.2681 and sank to a three-and-a-half year low against sterling, trading as low as GBP0.7950. The Australian dollar was also under pressure, slipping to its lowest level against the dollar since December, to trade at $0.9883.
"This price action brings dollar gains this month to between 2% and 7% against most currencies, with the trade-weighted dollar index now at its highest level since mid-March," said Citigroup C -1.24% in a note to clients. Traders have not yet filled up their books with dollars, meaning there was plenty of scope for further dollar gains, the bank suggested.
The greenback was also on the rise against emerging-market currencies and traded at a four-month high against the Russian ruble at RUB31.14 and against the Turkish lira at TRY1.8334, while it hit a five-month high against the South African rand ZAR8.3922.
Market participants will be watching for a slow of key economic data Wednesday, including euro-zone inflation and foreign trade figures at 0900 GMT, the Bank of England's Quarterly Inflation Report at 0930 GMT, and minutes from the Federal Open Market Committee's latest meeting will be published at 1800 GMT.
