FOREX-Dollar set for biggest weekly rise in 5 months as yields rise

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* Graphic: World FX Rates tmsnrt.rs/2RBWI5E

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LONDON, Nov 12 (Businesshala) – The US dollar climbed higher on Friday and is on track for its biggest weekly rise in five months as a surprisingly strong US inflation print stunned markets and prompted investors to hike US rate hikes. But inspired you to step up your bets. Early to mid 2022.

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With the short-dated US Treasury yield higher – the five-year bond yield hit a February 2020 high – investors bet that will force US policymakers to raise interest rates sooner than later Will go

The increase in the short-dated yield has narrowed the spread between the 30-year US Treasury yield and the 2-year debt to its lowest level in a year.

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Against a basket of its rivals, the dollar index gained 0.1% to 95.27, the highest level since July 2020. The greenback’s high this week has seen it break above a two-month trading range, with analysts predicting more gains.

“We do not think this is the end of the move and expect the US dollar to remain strong in the first half of 2022 as we approach the conclusion of the Fed’s taper in the first half of 2022 and with an increasing rate of growth during this period. will offer support for the US dollar,” Mizuho strategists said.

BOFA strategists said in a weekly note that increasing price pressures pushed inflation-adjusted 30-year US yields to their lowest level on record.

The renewed strength in the dollar has infused new life into ailing currency volatility markets as traders scramble to buy options to protect themselves against the strengthening of the dollar. Currency Volatility Index reaches new 6-month high.

Data on Wednesday showed a broad-based rise in US consumer prices last month at the fastest annual pace since 1990, questioning the Fed’s argument that price pressures will be “transient” and fueling speculation that policymakers will be more cautious than before. I will soon raise interest rates. ,

Markets now price the first rate hike by July and the high probability of the second by November. CME data shows a 50% chance of a rate hike by then, compared to less than 30% a month ago.

The euro slipped back to a 16-month low of $1.1436, and sterling fell to $1.3354, its weakest level this year.

Investors are increasingly bearish on the single currency outlook as the European Central Bank is unlikely to change its extremely sluggish policy settings in the near term against the backdrop of a slowing economy.

Citigroup’s economic surprise index for the US has outperformed its European counterparts, indicating higher gains for the US dollar versus the euro.

The risk-sensitive Australian dollar fell to $0.7277 for the first time in more than a month, while among cryptocurrencies, bitcoin traded just south of $65,000, down from the week’s record low of $69,000.

Reporting by Saikat Chatterjee; Additional reporting by Kevin Buckland in Tokyo; editing by

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