Connect with us

Trading

U.S. dollar continues to garner support from Fed hike expectations

U.S. dollar continues to garner support from Fed hike expectations 1

By Gertrude Chavez-Dreyfuss and Vidya Ranganathan

NEW YORK/SINGAPORE (Reuters) – The dollar edged higher on Monday in thin and choppy trading, in line with higher U.S. Treasury yields as investors braced for multiple half a percentage-point rate hikes this year from the Federal Reserve.

Volume was light on the day with Hong Kong, European, and Australia, and New Zealand markets closed for Easter Monday.

The dollar index, a gauge of the greenback’s value against six major currencies, rose 0.1% to 100.61. Late last week, the index hit its highest in two years.

“There is indeed history that when the Fed plans for hiking and tightening, the buck ends up losing during those cycles, but at the moment there is little in optimism out there that can knock the buck down,” said Juan Perez, director of FX trading at Monex USA in Washington.

“Better headlines in terms of ports not being shut down is what is needed for global currency momentum and currently there is none,” he added.

The U.S. rate futures market has priced in 96% chance of a 50 basis-point hike at next month’s Fed policy meeting, and about 215 basis points in cumulative rate increases.

The U.S. currency also hit a fresh two-decade high versus the yen overnight, but won a brief reprieve from Japanese policymaker comments on Monday, even as holidays confined the U.S. dollar to narrow ranges against most other currencies.

The yen fell to a two-decade low of 126.795 in early Asian trading, before both Bank of Japan Governor Haruhiko Kuroda and Finance Minister Shunichi Suzuki voiced concerns and caused it to bounce as far as 126.25. But the rally proved short-lived and it last at 126.58, little changed on the day.

At Monday’s lows, the yen was nearly 10% weaker than where it was at the beginning of March. It fell nearly 2% against the dollar last week, marking a sixth straight losing week.

Win Thin, head of currency strategy at BBH Global Currency Strategy, said the dollar did not seem to have significant chart points halting a potential further run-up against the yen until a 2002 high near 135.15.

“We see low risk of FX intervention. Until the BoJ changes its ultra-dovish stance, the monetary policy divergence argues for continued yen weakness and intervention would likely have little lasting impact,” Thin wrote.

Japanese policymakers have been vocal about their concerns around the falling yen, particularly after it slipped to the weaker side of 125 per dollar on April 11. The dollar stayed close to a two-year high versus the euro, supported by the unremitting hawkish comments from Fed officials.The euro, hamstrung by a lack of clarity on when rates in the euro zone would rise, was down 0.1% at $1.0801, just off last week’s low of $1.0758, a level unseen since April 2020.

In other currencies, the Australian dollar dropped to its lowest in a month and was last down 0.3% at US$0.7368. Cryptocurrency bitcoin traded below the $40,000 mark, last changing hands at $39,452, down 0.6%.

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

Currency bid prices at 10:34 AM (1434 GMT)

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

Previous Change

Session

Dollar index 100.6100 100.5100 +0.11% 5.171% +100.7600 +100.5000

Euro/Dollar $1.0799 $1.0810 -0.09% -5.00% +$1.0821 +$1.0784

Dollar/Yen 126.6100 126.5600 +0.04% +9.98% +126.7800 +126.2500

Euro/Yen 136.73 136.63 +0.07% +4.92% +137.0200 +136.4700

Dollar/Swiss 0.9435 0.9436 +0.00% +3.45% +0.9449 +0.9424

Sterling/Dollar $1.3025 $1.3058 -0.25% -3.68% +$1.3064 +$1.3008

Dollar/Canadian 1.2610 1.2616 -0.02% -0.24% +1.2644 +1.2606

Aussie/Dollar $0.7367 $0.7390 -0.31% +1.35% +$0.7403 +$0.7352

Euro/Swiss 1.0189 1.0189 +0.00% -1.74% +1.0201 +1.0175

Euro/Sterling 0.8289 0.8277 +0.13% -1.32% +0.8296 +0.8274

NZ $0.6728 $0.6763 -0.50% -1.69% +$0.6776 +$0.6726

Dollar/Dollar

Dollar/Norway 8.8375 8.8170 +0.12% +0.21% +8.8485 +8.8250

Euro/Norway 9.5456 9.5150 +0.32% -4.67% +9.5595 +9.5133

Dollar/Sweden 9.5640 9.5479 -0.03% +6.06% +9.5915 +9.5611

Euro/Sweden 10.3290 10.3202 -0.03% +0.93% +10.3510 +10.3259

(Reporting by Vidya Ranganathan; Editing by Edwina Gibbs and Marguerita Choy)

Editorial & Advertiser disclosure
Our website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.
Global Banking and Finance Review Awards Nominations 2022
2022 Awards now open. Click Here to Nominate

Advertisement

Newsletters with Secrets & Analysis. Subscribe Now