Investing.com - The dollar rose to 14-month highs against a currency basket on Wednesday, as fears over the impact of Turkey's currency crisis and global trade tensions bolstered safe haven demand.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.12% to 96.67 by 08:46 AM ET (12:46 GMT) after rising as high as 96.81 earlier, the most since late June, 2017.
The dollar has been boosted by weakness in the euro, which has been pressured by fears over the exposure of European banks to Turkey.
EUR/USD hit a low of 1.1309, the weakest level since July 5, 2017 and was last at 1.1322, off 0.2% for the day.
The dollar was lower against the traditional safe haven yen, with USD/JPY losing 0.2% to trade at 110.93.
Investors often gravitate to the Japanese currency during times of financial or political turmoil.
The gains in the dollar came as the Turkish lira extended a modest recovery, with USD/TRY hitting an intraday low of 5.9230, before pulling back to 6.1215.
It was the first time the lira crossed back below the psychologically important 6-lira-to-the-dollar level since plunging to record lows on Monday.
The lira strengthened even after Turkey imposed additional tariffs on some U.S. imports, escalating a diplomatic spat with Washington.
The country’s vice-president said the measures are in retaliation for the US government’s “deliberate attacks” on the Turkish economy in recent weeks.
The currency also found some support after Turkey’s financial regulators imposed new restrictions on the country’s banks, making it harder for some investors to bet against Turkish assets.
Deteriorating relations between the U.S. and Ankara and worries about Turkish President Tayyip Erdogan's increasing control over monetary policy and the economy have seen the lira tumble more than 40% this year.
The pound was trading close to 13-month lows, as the broadly stronger dollar and concerns over the growing prospect of a no-deal Brexit weighed.
GBP/USD was at 1.2702 after plumbing a low of 1.2692 overnight.
Sterling shrugged off data showing that annual inflation in the UK rose by 2.5% in July, up from 2.4% in June, the first year-on-year increase in 2018.
Meanwhile, data on Wednesday showed that U.S. retail sales rose by a larger than forecast 0.5% in July, underlining optimism over the economic outlook.
Another report showed that business activity remained robust in New York State this month, with the Empire State manufacturing index rising to 25.6.