Dollar Catches Breath As Fed Officials Leave Market Pondering Over Rates Path.

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The dollar hovered below a near two-decade high in Asian trading, having slipped overnight. After two Federal Reserve policymakers said they favoured a smaller rate rise than the 100 basis points (bps).

The dollar index, which measures the currency versus six counterparts, edged 0.03% higher to 108.60. After reaching and then falling back from the highest since September 2002 at 109.29.
But those bets were pared after Fed Governor Christopher Waller and St. Louis Fed President James Bullard both said they favoured another 75 bps hike for this month.

Fed funds futures currently indicate a 36% chance of a 100 bps increase, down from around 70% before the comments.
Even with the pullback, the dollar index is on track for a third winning week, up 1.58% on both bets for an increasingly aggressive Fed and as worries about a resulting recession fuelled demand for the currency as a safe haven.

Against the yen, the dollar was flat at 138.98 , keeping it on track for a 2.1% gain this week. It touched 139.38 overnight for the first time since September 1998 as U.S. Treasury yields widened the gap to their Japanese counterparts.
The euro was flat at $1.00245, after bouncing back from below parity.


Meanwhile, sterling trod water at $1.18265, after slumping to a 28-month low of $1.1761 overnight. It is down 1.71%, heading for its worst week since early May as political turmoil casts a shadow over the currency.
The risk-sensitive Australian dollar slipped 0.24% to $0.6732, heading back toward Thursday’s two-year low of $0.66825 after a sharper-than-expected decline in economic growth in key trading partner China.
-Financialpost.

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