FOREX-Rate bets rule currency markets as dollar shines; euro, Aussie sag

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TOKYO, Nov 17 (Businesshala) – The US dollar hit a new high since March 2017 against the yen and traded near a 16-month peak against a basket of key peers on Wednesday, as strong economic data dented earlier gains. Raised stakes for Federal Reserve interest rate hike.

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The Australian dollar weakened after wage data failed to strengthen the case for tighter monetary policy.

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The greenback last moved as high as 114.975 yen before changing hands at 114.755.

The dollar index – which measures the currency against six rivals including the yen – traded at 95.871, not far from an overnight high of 95.978 not seen since July last year.

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US retail sales grew more than expected in October, a report showed on Tuesday, building on momentum from last week when data showed consumer prices rising at the highest rate since 1990.

St. Louis Fed Chairman James Bullard said on Tuesday that the central bank should “work in a more drastic direction” in its next few meetings to prepare for if inflation does not subside.

Money markets are currently pricing in the high probability of a Fed rate hike in June, followed by a second one in November.

“The US economy has been shaken by the Delta soft patch and is gaining further momentum, although heavy supply chain issues and reopening bottlenecks,” Westpac strategists wrote in a client note. recommend to buy. 95 level.

“Bullard’s hawkish remarks – voters next year – will leave markets comfortable pricing the Fed hike (in) 2022, a stark contrast with Europe where renewed virus suppression measures are being implemented.”

The euro edged closer to a 16-month low as Europe grapples with growth concerns amid a renewed rise in COVID-19 cases.

Germany’s parliament is due to vote on Thursday on tougher measures to tackle the outbreak, while Austria earlier in the week imposed a lockdown on people without vaccinations. France, the Netherlands and many countries in Eastern Europe are also struggling to contain the infection.

European Central Bank President Christine Lagarde said later on Wednesday that tightening monetary policy to curb inflation could affect the euro area’s recovery.

ECB board member Isabel Schnabel also speaks at a separate event.

One euro last bought $1.13245, mostly flat since Tuesday, when it dropped as low as $1.1309 for the first time since July 2020.

In contrast, Sterling was firm after data was released on Tuesday showing British employers hired more people in October after the government’s job-protecting furlough scheme ended.

Traders will analyze consumer price data on Wednesday for further support for the Bank of England’s toughness.

Sterling was little changed at $1.34335 after climbing to an overnight high of $1.3472.

It strengthened slightly to 0.8429 per euro, falling back to its strongest level this month at 0.84265, reached on Tuesday.

The Aussie slid 0.24% to $0.7287 after economists’ expected wage hike figures on Wednesday did nothing to impress a dovish Reserve Bank of Australia.

On Tuesday, RBA Governor Philip Lowe pushed again against market pricing for a rate hike next year, saying recent data and forecasts do not warrant such a move.

Among the cryptocurrencies, bitcoin traded north of $60,000 after falling below that level for the first time this month on Tuesday. It reached a record $69,000 on Wednesday of last week.

Reporting by Kevin Buckland Editing by Mr Navaratnam

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