Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Dollar steadies after fall triggered by central bank moves

Published 12/15/2021, 08:37 PM
Updated 12/16/2021, 03:51 PM
© Reuters. FILE PHOTO: FILE PHOTO: A picture illustration shows U.S. 100-dollar bank notes taken in Tokyo August 2, 2011. REUTERS/Yuriko Nakao/File Photo

By David Henry

NEW YORK (Reuters) - The U.S. dollar steadied on Thursday but was headed toward a second day of losses as markets sorted a raft of central bank policy statements for clues to coming differences in interest rates and support for their economies.

The dollar index of major currencies was down 0.4% in afternoon trading in New York after having fallen as much as 0.5% in the morning.

Losses came against currencies associated with more risk taking, as well as against the safe-haven Japanese yen and the Swiss franc.

Within 24 hours, the dollar index plunged 1.1%, starting from a spike up when the U.S. Federal Reserve posted a new policy statement on Wednesday, down to a low shortly after the European Central Bank and the Bank of England made announcements on Thursday.

"What a day," said Marc Chandler, chief market strategist at Bannockburn Global Forex.

The British pound surged as much as 0.8% against the dollar after the Bank of England became the first major central bank to raise interest rates since the beginning of the pandemic.

The euro climbed more than 0.5% after the European Central Bank said it would slightly rein in stimulus.

The gentle move by the ECB contrasted with the more hawkish tone of the Fed, which said it will end its pandemic-era bond buying in March, paving the way for an expected three interest rate hikes in 2022..

The pound was last up 0.4% to $1.3314 and the euro was up 0.3% to $1.1332.

The swings suggested that some traders had moved to close out short positions against the euro and sterling, Chandler said.

The euro-dollar exchange rate also seems to be tracking changes in the spread between market yields of two-year U.S. and German government securities, Chandler said, adding that two-year yields are especially sensitive to central bank interest rate policies.

That spread, which had been trending wider this year with the relative hawkishness of the Fed to the ECB, narrowed slightly on Thursday in favor of the euro.

The different paths taken by major central banks underline deep uncertainties about how the fast-spreading Omicron variant will hit economies and about how much each should do to fight surging inflation, which is hitting hard in the United States and Britain, but less so in Europe.

The central banks included dovish elements in their statements, which gave markets confidence to move toward riskier trades without too much fear of recession from tighter monetary policy.

In cryptocurrencies, bitcoin fell 2% to $48,011.

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

Currency bid prices at 3:30PM (2030 GMT)

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

Previous Change

Session

Dollar index

95.9790 96.3790 -0.40% 6.666% +96.4490 +95.8500

Euro/Dollar

$1.1332 $1.1296 +0.32% -7.25% +$1.1361 +$1.1282

Dollar/Yen

113.6400 114.0500 -0.35% +9.99% +114.2450 +113.5600

Euro/Yen

128.76 128.79 -0.02% +1.45% +129.6300 +128.4600

Dollar/Swiss

0.9192 0.9244 -0.56% +3.90% +0.9256 +0.9192

Sterling/Dollar

$1.3314 $1.3263 +0.38% -2.55% +$1.3374 +$1.3243

Dollar/Canadian

1.2781 1.2832 -0.39% +0.38% +1.2857 +1.2763

Aussie/Dollar

$0.7178 $0.7173 +0.06% -6.70% +$0.7224 +$0.7146

Euro/Swiss

1.0414 1.0437 -0.22% -3.64% +1.0466 +1.0410

Euro/Sterling

0.8510 0.8512 -0.02% -4.79% +0.8528 +0.8454

NZ

Dollar/Dollar $0.6791 $0.6788 -0.07% -5.54% +$0.6833 +$0.6759

Dollar/Norway

8.9920 8.9945 +0.11% +4.86% +9.0310 +8.9525

Euro/Norway

10.1893 10.1732 +0.16% -2.65% +10.2192 +10.1183

Dollar/Sweden

9.0350 9.0767 -0.11% +10.23% +9.0995 +9.0053

© Reuters. FILE PHOTO: Euro, Hong Kong dollar, U.S. dollar, Japanese yen, pound and Chinese 100 yuan banknotes are seen in this picture illustration, January 21, 2016.   REUTERS/Jason Lee/Illustration//File Photo

Euro/Sweden

10.2391 10.2508 -0.11% +1.61% +10.2723 +10.2163

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.