Dollar gain rises while sterling drops

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U.S. economy, retail sales, US flag and US dollar with Covid-19 text..

On Friday, before the U.S. jobs report, the dollar was on track for a second straight week of earnings against major rivals. This could affect the timing of the Federal Reserve interest rate rises.

Sterling started its worst week while the Bank of England kept rates steady.

The dollar index was steady at 94.328 after rallying 0.52% overnight.

On Friday, the British pound was slightly changed following a 1.37% tumble in the previous session that set it up for a 1.38% drop for the week.

This week, investors have been forced to reset monetary policy expectations after several big global central banks knocked back bets for early rate hikes.

On Wednesday, Christine Lagarde, the president of the European Central Bank, pushed back against market bets for a rate hike for the following October. She also said that it was unlikely possible to occur such a move in 2022.

Also, on Wednesday, Jerome Powell (Fed Chair) said he was in no rush to increase borrowing costs, even as the Federal Open Market Committee declared a $15 billion monthly tapering of its $125 billion in monthly asset purchases.

According to the forecast by economists, U.S. non-farm payrolls will show a 450,000 surge in jobs, following a 195,000 rise in the prior month.

Westpac strategists wrote in a client note that the USD is still in better position even though the FOMC delivered a dovish taper.

Overview

The euro seemed slightly changed at $1.1557 after descending 0.48% overnight, putting it on course for a 0.15% drop this week.

In a research note, Alan Ruskin, Deutsche Bank macro strategist, wrote that if the ‘Taking away the punch bowl’ theme dominates the markets, then this force will prove consistently corrosive against the EUR. He also said it might need more than payrolls to break 1.16. However, he added that payrolls would not persist in the way of the USD breaking at EUR/USD’s downside support.

Since last Friday, the dollar was nearly flat at 113.67 yen, down 0.28%, meaning that the Japanese currency profited from the situation.

On Tuesday, the Reserve Bank of Australia fixed the tone for the week.

On Friday, the RBA commented on monetary policy, forecasting an increase in the cash rate in two years. However, the latest data and forecasts do not guarantee a rise in 2022.

The Aussie dollar remained slightly lower at $0.7395, adding to the previous session’s 0.68% drop.

On Thursday, New Zealand’s kiwi dollar slipped 0.08% to $0.70916, setting up a 1.08% weekly loss.

Among cryptocurrencies, bitcoin stood at around $62,200.

Ether traded around $4,600 after hitting a record high of $4,670.83 on Wednesday.

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