Sun, January 29, 2023

The dollar surged after the expected Fed Interest Rate Hike

Close-up,Hands,Counting,Money,American,Dollars,,,Counting,Money,American

On Tuesday morning, the dollar increased in Asia. This occurred as concerns over the Omicron strain, and interest rate hikes from the Fed increased.

The U.S. Dollar Index edged up 0.13% to $96.391 by 12:06 AM ET (5:06 AM GMT).

The USD/JPY pair rose 0.03% to 113.58.

The AUD/USD pair decreased by 0.35% to 0.7105, while the NZD/USD pair increased by 0.15% to 0.6745.

The USD/CNY pair rose 0.05% to 6.3654, while the GBP/USD pair edged down 0.12% to 1.3203.

Among around 20 central banks are the European Central Bank, the Fed, the Bank of England, and the Bank of Japan, handing down their separate policy decisions these days.

The Fed plans to begin its two-day monetary policy meeting today and hand down the policy decision tomorrow. Analysts expect the central bank to speed up its asset tapering program. Meanwhile, investors search for indications about the timing of interest rate hikes in the following year.

What investors expect in 2022

Investors are now expecting an interest rate hike by June and November 2022. Westpac analysts said that leaves a very high standard for the Fed to provide a hawkish surprise.

This week, the Bank of England, the European Central Bank, and the Bank of Japan plan to hand down their policy decisions.

Analysts expect the European Central Bank to confirm its withdrawal from the EUR1.86 trillion, equal to $2.09 trillion, pandemic emergency stimulus scheme during the meeting at the beginning of 2022.

In the meantime, according to Prime Minister Boris Johnson, the probability of the Bank of England declaring an interest rate hike is diminishing, with the U.K. reporting its first death case related to a new omicron strain. China said it discovered its first imported case of the new omicron infection in the country.

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