Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Dollar driven to five-week high by Fed rate hike forecasts

Economy Aug 19, 2022 03:26PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: Chinese Yuan and U.S. dollar banknotes are seen in this illustration taken February 10, 2020. REUTERS/Dado Ruvic/Illustration 2/2
 
USD/CNY
-0.08%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DX
+0.66%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Karen Brettell

NEW YORK (Reuters) - The U.S. dollar index hit a five-week high and posted its biggest weekly gain since April 2020 on Friday as investors adjusted for the likelihood that the Federal Reserve will keep hiking rates to battle inflation.

The U.S. central bank needs to keep raising borrowing costs to tame decades-high inflation, a string of its officials said on Thursday, even as they debated how fast and how high to lift them.

"They still have their work cut out for them and I don't think the market was really positioned that way after the July FOMC," said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto, referring to the Fed's Federal Open Market Committee meeting. "It's really all about getting inflation back to target."

The dollar index rose 0.61% to 108.13, its highest since July 15, while the euro dropped 0.54% to $1.0033, its lowest since the same date.

The greenback gained 0.73% to 136.87 against the Japanese yen, the strongest since July 27. Sterling tumbled 1.03% to $1.1813 and had its biggest weekly drop against the dollar since September 2020.

The Fed is seen as having more room to hike rates than central banks of other large economies which are more fragile.

"For the USD to weaken meaningfully, the Fed has to get more concerned about growth than inflation, and we are not there yet," Bank of America (NYSE:BAC) analyst Michalis Rousakis said in a report on Friday.

"Meanwhile, we expect the (European Central Bank) to stop hiking next year on concerns around growth and/or spreads. EUR is also exposed to the much worsened terms of trade and the slowdown in China," Rousakis said.

The euro was also dented on Friday after Gazprom (MCX:GAZP) said the Nord Stream 1 pipeline, which supplies gas from Russia to Europe under the Baltic Sea, will be shut down from Aug. 31 to Sept. 2 for maintenance.

Fed funds futures traders are pricing in a 55% expectation that the Fed will hike rates by 50 basis points in September and a 45% probability of a 75 basis points increase.

U.S. central bank officials have "a lot of time still" before they need to decide how large an interest rate increase to approve at their Sept. 20-21 policy meeting, Richmond Fed President Thomas Barkin said on Friday.

Fed Chair Jerome Powell will update the market on his views at the annual Jackson Hole symposium on Aug. 25-27.

China's yuan slipped to its lowest since September 2020 at 6.8199 per dollar in onshore trading after the central bank set a much-weakened midpoint guidance, with traders expecting further downside.

In cryptocurrencies, bitcoin fell 8.73% to $21,188. Ether was down 8.34% to $1,693.

"Weakness has seeped into the crypto sphere as speculators retreated from highly risky assets," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

========================================================

Currency bid prices at 3:00PM (1900 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 108.1300 107.4900 +0.61% 13.032% +108.2100 +107.4800

Euro/Dollar $1.0033 $1.0087 -0.54% -11.75% +$1.0096 +$1.0033

Dollar/Yen 136.8650 135.8950 +0.73% +18.91% +137.2200 +135.7150

Euro/Yen 137.33 137.06 +0.20% +5.38% +137.9600 +136.9500

Dollar/Swiss 0.9592 0.9570 +0.18% +5.11% +0.9598 +0.9553

Sterling/Dollar $1.1813 $1.1936 -1.03% -12.65% +$1.1936 +$1.1793

Dollar/Canadian 1.2994 1.2945 +0.38% +2.78% +1.3009 +1.2947

Aussie/Dollar $0.6867 $0.6914 -0.67% -5.52% +$0.6919 +$0.6860

Euro/Swiss 0.9622 0.9650 -0.29% -7.20% +0.9669 +0.9613

Euro/Sterling 0.8492 0.8455 +0.44% +1.10% +0.8511 +0.8453

NZ $0.6167 $0.6257 -1.43% -9.89% +$0.6257 +$0.6168

Dollar/Dollar

Dollar/Norway 9.8155 9.6840 +1.37% +11.43% +9.8190 +9.7535

Euro/Norway 9.8478 9.8150 +0.33% -1.65% +9.8690 +9.8205

Dollar/Sweden 10.5967 10.4977 +0.39% +17.51% +10.5992 +10.5007

Euro/Sweden 10.6322 10.5908 +0.39% +3.89% +10.6421 +10.5973

 

 

Dollar driven to five-week high by Fed rate hike forecasts
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (5)
SLN Lucktree
SLN Lucktree Aug 21, 2022 12:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
GBP/USd is going see deep cut ever
Muhammad Tufail
Muhammad Tufail Aug 19, 2022 3:45PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This fed ceo is crazy he want to *****peopleGot to ****ceo
Nils Hullmann
Nils Hullmann Aug 19, 2022 3:22AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
high dollar means hunger death all over the world
Bhagwan Dass
Bhagwan Dass Aug 18, 2022 11:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
doller now bearish mode
Harold Thurmer
Harold Thurmer Aug 18, 2022 10:14PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
As the dollar strengthens, Bitcoin will drop
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email