* Dollar hits more than 8-week high vs euro
* Dollar rallies vs yen after falling on Monday
* New U.S. single-family home sales surge in April
By Sam Forgione
NEW YORK, May 24 (Reuters) - The U.S. dollar hit its highest level against the euro in more than eight weeks on Tuesday and rallied against the yen and Swiss franc on increased expectations for an interest rate hike in coming months from the U.S. Federal Reserve.
Investors’ anticipation of a rate increase from the Fed in June or July gained momentum following minutes from the central bank’s April meeting released last week and comments on Monday from Fed officials signaling a June hike was firmly on the table.
The Fed should hike interest rates at a mid-June policy meeting unless data before then shows the U.S. economy is falling off its positive track, Philadelphia Fed President Patrick Harker said late on Monday.
The euro was last down 0.51 percent against the dollar at $1.1159, near a session low of $1.1146, its lowest level since March 24.
The dollar rebounded against the yen after posting its biggest daily percentage decline against the Japanese currency in more than three weeks on Monday, and was last up 0.65 percent at 109.94 yen, just under its session high of 110.04 yen.
“A re-pricing of Fed tightening expectations is the principal driver of the U.S. dollar’s resurgence,” said Richard Franulovich, senior currency strategist at Westpac Banking Corporation in New York. “Markets will wax and wane, but generally speaking, the thrust will be toward dollar gains.”
Fed funds futures contracts implied traders expected a 38 percent chance of a rate hike in June, compared with a 30 percent chance on Monday, according to CME Group’s FedWatch program.
Commerce Department data on Tuesday showed new U.S. single-family home sales surged to a more than eight-year high in April and prices hit a record high, also supporting the greenback.
“The blockbuster housing data has added more bullish fuel to the dollar,” said Joe Manimbo, senior market analyst with Western Union Business Solutions in Washington.
The Australian dollar was last down 0.54 percent against the dollar at $0.7185 after sliding more than 1 percent to $0.7145, its lowest since early March, as comments from Reserve Bank of Australia Governor Glenn Stevens fueled speculation that interest rates would be cut again.
The dollar index, which measures the greenback against a basket of six major currencies, hit an eight-week high of 95.616. The dollar hit a more than 10-week high against the Swiss franc of 0.9937 franc. (Reporting by Sam Forgione; Additional reporting by Jemima Kelly in London; Editing by Meredith Mazzilli)