Dollar holds near one-year high amid bets for earlier Fed rate hike

- Advertisement -

TOKYO (Businesshala) – The dollar was near a one-year high versus key peers on Wednesday, amid rising expectations the Federal Reserve would announce a tapering of stimulus next month, possibly with interest rate hikes through to mid-2022.

FILE PHOTO: A portrait illustration shows US $100 banknotes taken in Tokyo on August 2, 2011. Businesshala/Yuriko Nakao/File photo

Three Fed policymakers said overnight that the US economy had recovered enough to roll back the central bank’s asset-buying program, including Vice Chairman Richard Clarida.

- Advertisement -

The money market now puts the price at about a 50-50 chance of a rate hike by July.

The dollar index, which measures the greenback against six rivals, fell slightly lower on Tuesday to 94.460, when it touched 94.563 for the first time since the end of September 2020.

The rise in energy prices has fueled inflation concerns and raised bets that the Fed may need to move faster to normalize policy, officials had predicted, sending two-year Treasury yields overnight. Highest level in over 18 months. [US/]

Higher US yields helped push the dollar to a three-year high of 113.785 yen against the yen on Tuesday. The pair last traded at 113.485.

The euro closed at $1.1541, its lowest in nearly 15-month months, compared to the previous session’s $1.1522. Traders will focus on consumer price data later on Wednesday for more information on the timing of higher rates.

Ray Attrill, head of foreign exchange strategy at National Australia Bank in Sydney, said “the CPI is the main economic draw” and “has the potential to see Fed rate hike expectations resurface, one way or another.”

Most Fed policymakers say inflationary pressures will prove to be temporary.

Governors Lyle Brainard and Michelle Bowman are among Fed officials who are due to speak later on Wednesday, when minutes of the central bank’s September meeting are also due to be released.

Sterling fell in the middle of this month’s range, trading little changed since Tuesday at $1.3596.

The risk-sensitive Australian dollar slipped 0.2% to $0.7335, having retreated from Tuesday’s one-month high of $0.7384.

After hitting a five-month high of $57,855.79 earlier in the week, bitcoin traded around $56,500.

Reporting by Kevin Buckland; Editing by Ana Nicolasi da Costa


- Advertisement -

Stay on top - Get the daily news in your inbox

DMCA / Correction Notice

Recent Articles

Related Stories

Stay on top - Get the daily news in your inbox