Dollar heads for best week in months as Fed tightening looms

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SINGAPORE, Oct 1 (Businesshala) – The dollar started near its highest level of the year in the last quarter of 2021 and headed for its best week since June, as currency markets rose ahead of key peers in US interest rates. were hanging for.

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The euro slipped 0.1% to $1.1572 early Friday and fell 1.3% this week, falling through a key support of $1.16 to touch its lowest level since July 2020.

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The yen is down 0.6% for the week and doubled in a fortnight as higher US Treasury yields drove inflows from the Japanese yen into the dollar. US Treasury yields rose on year-end US tapering and rising market expectations of a rate hike in 2022.

The yen jumped from a 19-month low of 112.08 per dollar on Thursday as the yield settled, last traded at 111.41 per dollar. The dollar index stood at 94.327, up 1.1% so far this week, the biggest weekly increase since the end of June.

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A Federal Reserve meeting last week strengthened expectations of a reduction in asset purchases earlier this year and a rate hike in 2022 or early 2023.

“As long as the market is confident that the US will begin tightening monetary policy within a reasonable time frame, the dollar should remain well supported and eventually recover 5-10% from current levels,” said Société Générale strategist Kit Jux. There should be an increase.”

“The European Central Bank is likely to keep rates below zero, while a Fed hike should keep the euro/dollar in the post-2014 range, with the center of gravity at $1.12-1.16,” he said.

Commodity currencies jumped on the dollar on Thursday after a Businesshala report said China had ordered energy companies to secure supplies for the winter at all costs, citing people familiar with the matter.

Beijing has been scrambling to deliver more coal to utilities to restore supply amid a power crunch that has rattled the market because of the prospect of economic growth.

The Australian dollar rose 0.7% overnight, but that was hardly enough to offset a slide in the quarter as prices of Australia’s major export, iron ore, fell. The Aussies fell 3.6% in the third quarter – the worst performance of any G10 currency against the dollar.

The Australian hit a one-month low earlier this week and was slightly above that level of $0.7222. The New Zealand dollar also rose above a one-month low on Thursday and was last at $0.6892.

The central banks of the two countries meet next week, with the Reserve Bank of New Zealand expected to hike rates.

Sterling was also an underperformer in the previous quarter, falling 2.5%, and entering its worst week in more than a month due to concerns about a hawkish-sounding central bank despite growing supply chain problems. ready for

Sterling was trading just above a 9-month low of $1.3445.

Markets in Hong Kong and China remain closed on Friday. Afterwards, traders await US personal spending and core consumption deflator data and watch nervously for any progress on the debate on raising the US debt limit.

The deadline to authorize additional Treasury borrowing looms in mid-October.

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Currency Bid Price is 0134 GMT . Feather

all spots

Tokyo Spot

Europe Spot


BOJ. From Tokyo forex market information

Reporting by Tom Westbrook; Editing by Ana Nicolasi da Costa


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