Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Dollar posts biggest weekly rise in 7 months on rate bets

EconomyJan 28, 2022 04:20PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Saudi riyal, yuan, Turkish lira, pound, U.S. dollar, euro and Jordanian dinar banknotes are seen in this illustration taken January 6, 2020. REUTERS/Dado Ruvic/Illustration

By Herbert Lash

NEW YORK (Reuters) -The dollar consolidated gains on Friday and posted its biggest weekly rise in seven months as markets priced in a year ahead of aggressive hikes in U.S. interest rates.

Money markets priced in a 28.5-basis-point interest rate hike in March and as many as 119.5 basis points in cumulative increases by year's end as the dollar steadily rose in a week highlighted by a more hawkish tone coming out of a Federal Reserve meeting.

The dollar index rose a scant 0.04%. The index, which measures the dollar's value against other major currencies, rose about 1.7% for the week to mark its biggest weekly gains since June. It shot above 97 for the first time since July 2020.

"I look for some consolidation, but nothing to say that the dollar's up move is over," said Marc Chandler, chief market strategist at Bannockburn Global Forex.

U.S. labor costs increased strongly in the fourth quarter, but less than expected, the Labor Department said. The Employment Cost Index (ECI), the broadest measure of labor costs, rose 1.0% after increasing 1.3% in the prior quarter.

Economists polled by Reuters had forecast a 1.2% advance in the ECI, widely viewed as one of the better measures of labor market slack and a predictor of core inflation.

"The Employment Cost Index, which (Fed Chair Jerome) Powell has referred to specifically, was a bit softer than expected and has spurred some position adjusting ahead of the weekend," Chandler said.

U.S. Treasury yields eased, with 10-year yields falling to about 1.77% for the day, well below two-year highs of nearly 1.9% hit on Monday.

The two-year Treasury yield, which often moves in step with rate expectations, slid 2.8 basis points to 1.164%, but was still much higher for the week.

The euro nursed losses on Friday with the single currency little changed at $1.1143, a bit up from Thursday's 20-month low of $1.1131.

Major currencies drifted sideways in Asian trading before Lunar New Year holidays next week even though U.S. yields were marginally higher.

Data has been supportive of the dollar as the U.S. economy registered its best annual growth in nearly four decades.

The greenback is poised to gain further versus the euro and yen as the Fed raise rates but the European Central Bank and Bank of Japan likely stand pat. BOJ Governor Haruhiko Kuroda said Friday it was premature to raise the bank's rate targets.

A preliminary estimate next week of euro zone consumer prices in January is expected to lower the year-over-year rate toward 4.3% from 5.0%, allowing ECB President Christine Lagarde to keep the hawks at bay, Chandler said.

The yen rose 0.14% to 115.21 per dollar, while the Australian and New Zealand dollars languished, with the kiwi dipping slightly to a fresh 15-month low of $0.6570.

Sterling was pushed to a one-month low of $1.3360 on Thursday but has bounced back a bit as traders await the Bank of England's meeting next week. Rates markets have priced a 90% chance of a hike.

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

Currency bid prices at 3:33PM (2033 GMT)

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

Previous Change

Session

Dollar index 97.2440 97.2260 +0.04% 1.653% +97.4410 +97.0540

Euro/Dollar $1.1144 $1.1144 +0.00% -1.97% +$1.1174 +$1.1122

Dollar/Yen 115.1950 115.3650 -0.15% +0.07% +115.6800 +115.1250

Euro/Yen 128.36 128.55 -0.15% -1.50% +128.8500 +128.3600

Dollar/Swiss 0.9311 0.9310 +0.02% +2.08% +0.9329 +0.9291

Sterling/Dollar $1.3389 $1.3380 +0.04% -1.02% +$1.3433 +$1.3366

Dollar/Canadian 1.2777 1.2740 +0.29% +1.05% +1.2796 +1.2713

Aussie/Dollar $0.6987 $0.7034 -0.68% -3.89% +$0.7046 +$0.6968

Euro/Swiss 1.0377 1.0375 +0.02% +0.08% +1.0391 +1.0360

Euro/Sterling 0.8322 0.8323 -0.01% -0.93% +0.8334 +0.8306

NZ $0.6537 $0.6582 -0.71% -4.53% +$0.6589 +$0.6532

Dollar/Dollar

Dollar/Norway 8.9890 8.9605 +0.41% +2.13% +9.0210 +8.9375

Euro/Norway 10.0177 9.9641 +0.54% +0.05% +10.0840 +9.9557

Dollar/Sweden 9.4500 9.3791 +0.67% +4.79% +9.4800 +9.3706

Euro/Sweden 10.5306 10.4609 +0.67% +2.90% +10.5548 +10.4511

Dollar posts biggest weekly rise in 7 months on rate bets
 

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.
 
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