Dollar heads for best week in months as Fed tightening looms

Above Article Content Ad

U.S. greenback payments are seen on a lightweight desk on the Bureau of Engraving and Printing in Washington, November 14, 2014. REUTERS/Gary Cameron/File Photograph/File Photograph

SINGAPORE, Oct 1 (Reuters) – The greenback started the final quarter of 2021 close to its highest ranges of the 12 months and headed for its greatest week since June, as foreign money markets braced for U.S. rates of interest to rise earlier than these of main friends.

The euro slipped 0.1% early on Friday to $1.1572 and has fallen 1.3% this week, tumbling by main assist round $1.16 to the touch its lowest ranges since July 2020.

The yen is down 0.6% for the week and twice as a lot in a fortnight as greater U.S. Treasury yields have drawn flows out of the Japanese yen into {dollars}. U.S. Treasury yields have surged on rising market expectations of U.S. tapering by year-end and charge hikes in 2022.

The yen bounced from a 19-month low of 112.08 per greenback on Thursday as yields settled, final buying and selling at 111.41 per greenback. The greenback index stood at 94.327, having gained 1.1% to date this week, the biggest weekly rise since late June.

A Federal Reserve assembly final week bolstered expectations for asset buy tapering starting this 12 months and charge hikes beginning in 2022 or early in 2023.

“So long as markets stay assured that the U.S. goes to begin tightening financial coverage inside an inexpensive timeframe, the greenback ought to stay properly supported and finally rise 5-10% from present ranges,” stated Societe Generale strategist Equipment Juckes.

“The prospect of the European Central Financial institution protecting charges beneath zero whereas the Fed hikes ought to maintain euro/greenback within the post-2014 vary, with a centre of gravity round $1.12-1.16,” he stated.

Commodity currencies made a bounce on the greenback on Thursday following a Bloomberg report which stated China had ordered vitality corporations to safe provides for the winter in any respect prices, citing unnamed folks conversant in the matter.

Beijing is scrambling to ship extra coal to utilities to revive provide amid an influence crunch that has unsettled markets because of the doubtless hit to financial progress.

The Australian greenback rose 0.7% in a single day however that was hardly sufficient to offset a slide within the quarter as costs for Australia’s main export, iron ore, fell. The Aussie slumped 3.6% within the third quarter – the worst efficiency of any G10 foreign money in opposition to the greenback.

The Aussie hit one-month lows earlier this week and was final simply above these ranges at $0.7222. The New Zealand greenback additionally lifted from a month-low on Thursday and final sat at $0.6892.

Central banks in each international locations meet subsequent week, with the Reserve Financial institution of New Zealand anticipated to hike charges.

Sterling was additionally an underperformer final quarter, dropping 2.5%, and appears set to log its worst week in additional than a month weighed by worries a few hawkish sounding central financial institution regardless of rising provide chain issues.

Sterling traded simply above a 9-month low at $1.3445.

Markets in Hong Kong and China are closed on Friday. Later within the day, merchants are awaiting U.S. private spending and core consumption deflator knowledge and nervously anticipating any progress on the talk over elevating the U.S. debt ceiling.

A deadline for authorising further Treasury borrowing looms in mid-October.


Foreign money bid costs at 0134 GMT

All spots

Tokyo spots

Europe spots


Tokyo Foreign exchange market data from BOJ

Reporting by Tom Westbrook; Modifying by Ana Nicolaci da Costa


Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button