Dollar nears a one-year peak ahead of Fed meeting

The U.S. dollar held near a one-year peak against a basket of peer currencies on Wednesday. The rise came amid increasing expectations. The Fed will announce a tapering of stimulus next month, potentially following interest rate raises by mid-2022.

Three Fed policymakers announced on Tuesday that the U.S. economy had recovered enough to start to scale back the central bank’s asset-purchase program, including Vice Chair Richard Clarida.

Significantly, money markets now price around a 50-50 chance of a rate rise by July.

The U.S. dollar index, which tracks the greenback against rivals, declined slightly to 94.271 from Tuesday. As we know, in the previous session, it hit 94.563 for the first time since September 2020.

Rising energy prices have spurred inflation concerns and fuelled bets that the Fed may need to move faster to normalize policy than officials had projected. Notably, it sent two-year Treasury yields to their highest level in over 18 months overnight.

Higher U.S. yields helped push the greenback to a three-year peak against the Japanese yen on Tuesday at 113.555 yen. Significantly, the pair last stood at 113.575.

The euro gained 0.3% to close at $1.1564, well within sight of the prior session’s $1.1522, its lowest level in around 15 months.

The market is now waiting for consumer price data later on Wednesday, which will likely provide further insight into the timing of higher rates.

According to Ray Attrill, head of foreign exchange strategy at National Australia Bank in Sydney, CPI is the main economic draw. It has the potential to see Federal Reserve rate hike expectations move again, one way or another.

The British pound wavered in the middle of this month’s range, trading a touch higher from Tuesday at $1.3634.

The risk-sensitive currency, the Australian dollar, traded flat at $0.7351, recovering from Tuesday’s one-month peak at $0.7384.

In cryptocurrencies, Bitcoin stood at about $55,139 after hitting a five-month peak of $57,855.79 at the start of the week.

Support Platform Spread Trading Instrument

Subscribe to our newsletter

Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. If you are interested in following the latest news on the topic, please follow Finance Brokerage on Google News.

ForexForex MarketsForex newsForex tradingUS dollar

What's your reaction?

In Love
Not Sure

You may also like

More in:News

Leave a reply

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

Next Article:

0 %