U.S. dollar skyrocketed to a 20-year high. Why's that?  

Dollar Rises Higher on Faster Rate Hikes

Powered by bets, the U.S. Federal Reserve could deliver more rapid and more significant interest rate hikes in the months ahead.

A day behind, the Fed flagged that it was ready to begin lifting rates in March to contain inflation. Money markets moved to price in as many as five quarter-point increases by year-end.

This backdrop purchased dollar bulls out in force. The dollar index, which gauges the dollar’s value versus other major currencies, increased to 97.120, the highest after July 2020.

The euro declined 0.75% to $1.1156, its lowest following June 2020. The dollar also hit its most elevated levels in more than a year versus the New Zealand dollar, a seven-week peak versus Australia’s currency, and rose broadly against emerging market currencies.

The Fed on Wednesday suggested it was likely to increase rates in March, as widely expected, and reaffirmed plans to end its bond purchases that month before significantly reducing its asset holdings.

Yuan Hit

Growing U.S. Treasury yields provided further momentum to the dollar’s gains.

After rallying 0.7% versus the yen on Wednesday in its sharpest climb in more than two months, the dollar firmed an additional 0.5% to 115.20 yen.

The risk-sensitive Australian dollar dropped 0.6% to $0.7072, falling to as low as $0.7064. Meanwhile, the New Zealand dollar slipped to as low as $0.6597, a near 15-month trough.

Sterling fell to a one-month low at $1.3376 and was last down 0.6% on the day. Britain’s pound is delicately balanced as traders keep a wary eye on Prime Minister Boris Johnson, who is under pressure after attending parties during lockdowns, and on next week’s Bank of England meeting. [GBP/]

Elsewhere, China’s yuan took a hit as data revealed Chinese industrial profits grew at their slow pace in more than 18 months, bolstering the case for policy support.

Read also: PrimoTrade Review 2021: All You Need To Know!

Sending
User Review
0 (0 votes)

RELATED POSTS

Leave a Reply

tmn-img-28-1

Share this on

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

Rec­om­mended for You

Subscribe to Our Newsletters

Have The Best Of Trade Market News Delivered Directly To Your
Mailbox. Subscribe To Receive The Latest Market News.