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 dips as risk sentiment improves, bitcoin hits record high

EconomyOct 20, 2021 03:37PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© 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

By Karen Brettell

NEW YORK (Reuters) - The dollar dipped on Wednesday as risk sentiment improved and as investors focused on rising commodity prices and when global central banks are likely to begin hiking interest rates to fend off persistently high inflation.

The greenback hit a one-year high against a basket of other currencies last week as market participants ramped up bets that the Federal Reserve will raise rates sooner than expected to quell rising price pressures.

Those bets have faded, however, while investors are pricing for even more aggressive rate increases in other countries and as commodity-linked currencies including the Canadian and Australian dollars outperform.

"When it comes to central banks, there's a lot of aggressive pricing out there," said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto, noting that the market is likely overstating how quickly rate hikes will come.

The dollar index fell 0.24% to 93.57.

Rai expects the dollar may outperform if investors pare back rate hike expectations in other countries, though "that's something that's going to take some time to correct."

"When push comes to shove, given the underlying fundamentals in the United States, which are still very constructive for growth, we think the Fed is probably going to be the central bank that raises rates over the course of the coming years at a bit of a more aggressive clip than the market is pricing in now," Rai said.

Market participants are pricing for the Fed to raise rates twice by the end of 2022.

Fed Governor Randal Quarles on Wednesday said that while it is time for the Fed to begin dialing down its bond-buying program, it would be premature to start raising interest rates in the face of high inflation that is likely to recede next year.

The Fed also said in its latest Beige Book that the U.S. economy grew at a "modest to moderate" rate in September and early October, as the latest surge of COVID-19 cases crested and began to recede.

ING FX strategists said in a client note that the dollar's recent decline could be due to a combination of markets closing long-dollar positions and "a benign risk environment, where a strong U.S. earnings season has continued to offset inflation/monetary tightening concerns."

"At this stage, it looks like the dollar is lacking some catalysts to contain the ongoing correction, and any support to the greenback may need to come from a cool-off in the recent risk-on mood in markets," ING said.

The Australian dollar, seen as a liquid proxy for risk appetite, gained 0.60% on the day to $0.7522, the highest since July 7.

The New Zealand dollar rose 0.73% to $0.7205, the highest since June 11.

Reduced demand for safe-haven assets saw the dollar hit a four-year high of 114.67 versus the yen overnight, before retracing to 114.27.

The Canadian dollar was higher on the day after the country's annual inflation rate accelerated to an 18-year high in September, putting the focus on the Bank of Canada ahead of a rate decision next week.

The greenback dropped 0.35% against the loonie to CAD$1.2317.

The British pound gained 0.30% in the day to $1.3831 after data showed that British inflation slowed unexpectedly last month. The figures did little to change expectations that the Bank of England will become the world's first major central bank to raise rates.

In cryptocurrencies, bitcoin hit a record high of $67,017, a day after the first U.S. bitcoin futures-based exchange-traded fund began trading.

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

Currency bid prices at 3:08PM (1908 GMT)

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

Previous Change

Session

Dollar index 93.5720 93.8060 -0.24% 3.991% +93.8800 +93.5370

Euro/Dollar $1.1653 $1.1632 +0.18% -4.63% +$1.1658 +$1.1617

Dollar/Yen 114.2700 114.4000 -0.19% +10.55% +114.6950 +114.0800

Euro/Yen 133.17 133.06 +0.08% +4.92% +133.4800 +132.7500

Dollar/Swiss 0.9190 0.9230 -0.44% +3.87% +0.9252 +0.9187

Sterling/Dollar $1.3831 $1.3790 +0.30% +1.24% +$1.3834 +$1.3743

Dollar/Canadian 1.2317 1.2363 -0.35% -3.25% +1.2367 +1.2308

Aussie/Dollar $0.7522 $0.7477 +0.60% -2.22% +$0.7522 +$0.7465

Euro/Swiss 1.0710 1.0733 -0.21% -0.90% +1.0765 +1.0706

Euro/Sterling 0.8424 0.8431 -0.08% -5.74% +0.8460 +0.8424

NZ $0.7205 $0.7154 +0.73% +0.36% +$0.7208 +$0.7147

Dollar/Dollar

Dollar/Norway 8.3095 8.3525 -0.51% -3.23% +8.4120 +8.3065

Euro/Norway 9.6855 9.7187 -0.34% -7.47% +9.7789 +9.6828

Dollar/Sweden 8.5844 8.6203 -0.26% +4.73% +8.6361 +8.5818

Euro/Sweden 10.0038 10.0295 -0.26% -0.72% +10.0456 +10.0030

Dollar dips as risk sentiment improves, bitcoin hits record high
 

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)
Thomas Read
Thomas Read Oct 20, 2021 6:15PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
usdcad objective 1.2000
Fadli Pratama
Fadli Pratama Oct 20, 2021 12:43PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
dollar is totally useless,you shouldn't trust..buy XAU
Afolabi Ayo
Afolabi Ayo Oct 20, 2021 5:10AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
hmmmm
Krounda Artafa
Krounda Artafa Oct 20, 2021 2:43AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
krounda
William Bailey
William Bailey Oct 20, 2021 12:16AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Printing all the way to default!!
 
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
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email