Dollar pauses after rallying to one-year high earlier in week

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TOKYO, Oct 14 (Businesshala) – The dollar touched its lowest level this week against major peers on Thursday, relieved of a rally that saw it sharply hit a one-year high driven by hopes of a hike in Federal Reserve interest rates. level was reached.

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The dollar index, which measures the currency against six rivals, was flat at 94.016 after falling 0.53% on Wednesday, its highest since August 23.

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After gaining nearly 3% since the beginning of last month, the index touched 94.563 on Tuesday, its highest level since the end of September 2020.

The dollar was still back minutes after a September meeting of the Federal Open Market Committee confirmed that a lack of stimulus is certain to begin this year, and a growing number of policymakers worry that high inflation. may remain.

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A report from the Labor Department shows US consumer prices rose solid in September, and are likely to rise further amid a rise in energy prices, potentially at the Fed as soon as possible to normalize policy. There is pressure to work.

The US 5-year, 5-year forward break-even inflation rate, one of the more closely followed gauges of long-term inflation expectations, rose 2.59% overnight to its highest level in seven years.

Most Fed officials, including Chair Jerome Powell, have argued so far that price pressure will be momentary.

The money market is currently pricing at around 50/50 odds of the first 25 basis point rate increase as of July.

“The USD response may be an example of ‘buy rumour, sell fact’,” Joseph Caperso, a strategist at the Commonwealth Bank of Australia, wrote in a client note.

“We believe that the FOMC’s assumption of a temporary spike in inflation is incorrect. A more aggressive tightening cycle will support the USD in our view.”

The dollar rose 0.11% to 113.37 yen, but was hit overnight back from a three-year peak of 113.80 yen.

The euro was mostly flat since Wednesday at $1.1599, but had previously touched $1.1601 for the first time since October 5.

Sterling was little changed at $1.3665, up 0.55% on Wednesday and near its high of the month.

Bitcoin surged higher to touch a five-month high at $58,300.

Reporting by Kevin Buckland; Editing by Muralikumar Anantharaman

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