On Thursday, the dollar rose to its highest level versus other major currencies since July 2020, boosted by expectations that the US Federal Reserve would raise interest rates quicker and more aggressively in the months ahead.
Money markets rushed to price in as many as five quarter-point rises by year’s end a day after the Fed signaled that it was ready to start raising rates in March to manage inflation.
The dollar index, which gauges the greenback’s value against other major currencies, surged to 97.120, the highest level since July 2020, resulting from this background.
The euro fell 0.75 percent to $1.1156, reaching its lowest level since June 2020.
The Federal Reserve said on Wednesday that it expects to raise interest rates in March, as predicted, and that it would cease its bond purchases that month before considerably decreasing its asset holdings.
In a follow-up press conference, Chair Jerome Powell said no decisions were taken. However, he did not rule out the possibility of a 50-basis-point rise in answer to a query.
GNP numbers for the United States are likely to show yearly growth at its highest level since 1984, later Thursday.
Outlook on Rates
Rising Treasury rates aided the dollar’s gains in the United States. The dollar strengthened 0.5 percent to 115.20 yen after rising 0.7 percent versus the yen on Wednesday, the largest increase in more than two months.
The risk-sensitive Australian dollar sank 0.6 percent to $0.7072 after falling as low as $0.7064. At the same time, the New Zealand currency hit an almost 15-month low of $0.6597.
Sterling sank to a one-month low of $1.3376 and was down 0.6 percent on the day when writing. The pound is precariously balanced as traders keep a close eye on Prime Minister Boris Johnson. He is under fire for attending parties during lockdowns, as well as the Bank of England meeting next week.
The yuan traded at 6.3642 versus the dollar in offshore trade, down 0.7 percent. It was on course to have its greatest one-day drop since July of last year.
Interested in Forex Trading? Read WiBestBroker’s comprehensive LimeFX Review.
COMMENTS