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U.S. dollar gains as Fed seen wrapping up asset purchases earlier than expected
Published by Jessica Weisman-Pitts
Posted on December 13, 2021
4 min readLast updated: January 28, 2026
Global Banking & Finance Review®
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Published by Jessica Weisman-Pitts
Posted on December 13, 2021
4 min readLast updated: January 28, 2026
The U.S. dollar rose as investors anticipate the Fed will end asset purchases sooner, affecting global currencies like the euro and yen.
By Gertrude Chavez-Dreyfuss and Stefano Rebaudo
NEW YORK (Reuters) -The dollar firmed on Monday ahead of a slew of central bank meetings this week led by the Federal Reserve with investors expecting the U.S. central bank to announce it will wrap up its bond purchases sooner than expected, as they look for clues on timing of interest rate increases next year.
Aside from the Fed, the European Central Bank, Bank of Japan, Bank of England, Swiss National Bank, and Norges Bank, among others, all have policy decisions in the next few days.
The euro fell, as it is seen as vulnerable to a rate hike in the United States given expectations that the Fed will tighten policy more quickly than the dovish ECB.
The dollar index, which measures the greenback against six major peers, was up 0.2% at 96.286. The euro was down 0.3% at $1.1285.
Against the yen, the dollar was up 0.1% at 113.525 yen.
“While markets have moved to price in a quicker taper and a more aggressive tightening path from the Fed, there is still some scope for surprises this week — perhaps from a hawkish shift in the dot plot or the Fed deploying language that indicates a quicker shift to generally tighter monetary conditions,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.
“A hawkish-sounding Fed is likely to contrast with dovish messaging from the ECB and BoJ in particular.”
That said, some analysts believe the dollar’s march higher in recent weeks has already factored in many of its possible sources of strength in the short term.
“Going to next year, I don’t feel the same degree of dollar bullishness as the consensus estimates,” said Kamakshya Trivedi, co-head of global FX, rates and EM strategy at Goldman Sachs.
“For example, if we start to see higher commodity prices and decent data from China, the dollar may be on the back foot after a good run.”
The pound dipped 0.2% to $1.3247 after Prime Minister Boris Johnson said on Sunday Britain faced an Omicron “tidal wave”. On Monday he said at least one person has died in the UK due to the latest variant.
The Swiss franc was down versus the dollar, which was last up 0.1% at 0.9219 francs, while the euro was down 0.1% at 1.0410 francs.
Moves in the franc came as the Swiss National Bank’s sight deposits rose by their highest amount in seven months last week, indicating policymakers are taking the first decisive steps to battle a rise in the value of the franc against its major rivals, particularly the euro.
The SNB, which has been battling the appreciation of the franc since the start of the pandemic, is due to make its latest interest rate decision on Thursday. [nL1N2SY0L0]
Bitcoin fell 4.7% to $47,787 after hitting levels above $50,000 on Sunday. Ether, the coin linked to the Ethereum blockchain, dropped 5.3% to $3,915.
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Currency bid prices at 10:10 AM (1510 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index 96.2970 96.1040 +0.21% 7.019% +96.4500 +96.0800
Euro/Dollar $1.1285 $1.1316 -0.28% -7.64% +$1.1319 +$1.1261
Dollar/Yen 113.5200 113.3950 +0.11% +9.87% +113.7200 +113.3000
Euro/Yen 128.11 128.30 -0.15% +0.94% +128.4500 +128.0300
Dollar/Swiss 0.9224 0.9207 +0.20% +4.27% +0.9256 +0.9200
Sterling/Dollar $1.3247 $1.3271 -0.17% -3.03% +$1.3268 +$1.3222
Dollar/Canadian 1.2781 1.2725 +0.45% +0.38% +1.2789 +1.2710
Aussie/Dollar $0.7122 $0.7174 -0.72% -7.42% +$0.7176 +$0.7121
Euro/Swiss 1.0409 1.0421 -0.12% -3.68% +1.0430 +1.0409
Euro/Sterling 0.8518 0.8529 -0.13% -4.69% +0.8537 +0.8501
NZ $0.6755 $0.6799 -0.63% -5.92% +$0.6868 +$0.6754
Dollar/Dollar
Dollar/Norway 9.0325 8.9450 +0.85% +5.05% +9.0350 +8.9850
Euro/Norway 10.1948 10.1150 +0.79% -2.60% +10.1970 +10.0990
Dollar/Sweden 9.0864 9.0463 +0.09% +10.86% +9.1096 +9.0512
Euro/Sweden 10.2541 10.2448 +0.09% +1.76% +10.2657 +10.2248
(Reporting by Gertrude Chavez-Dreyfuss in New York and Stefano Rebaudo in Milan; Editing by Mark Heinrich)
The article discusses the U.S. dollar's rise due to expectations of the Federal Reserve ending asset purchases earlier than expected.
The euro fell as it is vulnerable to U.S. rate hikes, with the Fed expected to tighten policy faster than the ECB.
Bitcoin fell 4.7% and Ether dropped 5.3% following the dollar's rise and market expectations.
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