FOREX-Dollar edges off of 16-month peak as investors assess policy landscape

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* Graphic: World FX Rates (Analyst adds comments, updates prices)

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NEW YORK, Nov 17 (Businesshala) – The US dollar fell below a new 16-month high on Wednesday, while the euro remained on its back foot as investors adjusted to the central bank amid mounting price pressure, the US Federal Reserve observed. Hiking rates through mid-2022.

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The dollar index, which measures the currency against a basket of six rivals, slipped 0.101% to 95.846 after touching 96.266 for the first time since mid-July 2020.

Versus the yen, the greenback hit 4-1/2-year highs and tested the $1.12 level against the euro, helped by strong US retail sales data and sharp comments from Fed policymakers, which That’s in contrast to the dovish comments from the head of European. Central bank.

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“The market is starting to understand that you’re going to have different themes in FX,” said Edward Moya, senior market analyst at FX broker Oanda. “I think you’re in a choppy phase… you continue to see markets stabilize on inflation,” he said.

Money markets are now pricing in the high probability of a Fed rate hike in June, followed by a second one in November. CME data suggests a 50% chance of 25 bps rate hike by July 2022.

Antje Prefke, a forex strategist at Commerzbank, said: “The market believes a key rate hike will take place in the second half of next year.” “Even for me, the dollar remains a ‘buy on dips’ in the short term.”

The dollar rose last week after US consumer prices rose in October at the fastest rate since 1990, and that momentum continued on Tuesday when a report showed retail sales rose more than expected in the previous month.

Elsewhere, Wednesday’s data showed inflation in October hit a 10-year high in the UK and an 18-year high in Canada.

The pound climbed to a one-week high against the dollar and a 21-month high against the euro after British data boosted hopes of a rate hike by the Bank of England’s Monetary Policy Committee (MPC) early next month. .

“While there are still many MPC members who believe that inflation is temporary, the cards now favor a sharp turn from the central bank in December,” said Giles Coglan, chief analyst at HYCM.

The Canadian dollar softened as inflation numbers were in line with forecasts, and as oil prices fell, partly due to a stronger US dollar.

The greenback rose to 114.975 yen, its highest level since March 2017 before retreating to 114.135 yen.

The euro was down 0.07% at $1.1312.

Among cryptocurrencies, bitcoin traded around $60,000 after falling below that level for the first time this month on Tuesday.

Reporting by John McCrank in New York Additional reporting by Saikat Chatterjee in London Editing by Praveen Char and Matthew Lewis


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