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U.S. dollar rises to two-week high as Fed taper view builds
Published by Jessica Weisman-Pitts
Posted on September 13, 2021
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Published by Jessica Weisman-Pitts
Posted on September 13, 2021
By Gertrude Chavez-Dreyfuss and Iain Withers
NEW YORK/LONDON (Reuters) -The dollar climbed to a two-week peak against a basket of major currencies on Monday, as investors continued to price in expectations that the U.S. Federal Reserve could reduce its asset purchases sooner rather than later despite a surge in COVID-19 cases.
The dollar index earlier rose to 92.887, its highest level since Aug. 27. It was last up 0.1% at 92.707.
A flurry of U.S. economic data is due out this week, starting with U.S. consumer price data on Tuesday, which will give a broad picture of the economy’s progress ahead of the Fed meeting next week.
The Philadelphia Fed President Patrick Harker became the latest official to say he wants the central bank to start tapering this year, saying in a Nikkei interview that he was keen to scale back asset purchases.
“The dollar is off to a quick start to the week on expectations that U.S. data this week, while likely mixed, could cement the case for the Fed to taper stimulus next quarter,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
Manimbo added that stubbornly high inflation would add to tapering expectations.
Tapering typically benefits the dollar as it means a step toward tightening monetary policy. It also means the Fed will be buying less debt assets, which suggests that there will be less dollars in circulation.
The Wall Street Journal reported on Friday that Fed officials will seek to make an agreement to begin paring bond purchases in November.
Retail sales and productions figures also are slated for later this week.
The euro was among the currencies to lose ground to the dollar, dipping to $1.1770, its lowest level in a little over two weeks, after the European Central Bank said last week it would start to trim its own emergency bond purchases. The euro was last down 0.1% at $1.1799.
Against the yen, the dollar was little changed at 109.95 yen.
“A couple of dynamics favor the dollar,” said Rodrigo Catril, senior currency strategist at National Australia Bank in Sydney.
“Re-opening still faces challenges from the consumer, who is cautious, and from bottlenecks which restrict ability for the economy to rebound with some gusto. At the same time rising infections suggest we may still need to reintroduce restrictions of some sort. The other thing is that the Fed continues to signal that tapering is coming,” Catril added.
In the cryptocurrency market, bitcoin was down 3.1% at $44,567.
========================================================
Currency bid prices at 10:05AM (1405 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index 92.6500 92.6300 +0.03% 2.966% +92.8870 +92.6170
Euro/Dollar $1.1802 $1.1812 -0.08% -3.40% +$1.1814 +$1.1771
Dollar/Yen 109.9200 109.9150 +0.01% +6.39% +110.1550 +109.8600
Euro/Yen 129.72 129.79 -0.05% +2.21% +129.8600 +129.5900
Dollar/Swiss 0.9208 0.9181 +0.33% +4.11% +0.9241 +0.9182
Sterling/Dollar $1.3838 $1.3831 +0.07% +1.31% +$1.3845 +$1.3797
Dollar/Canadian 1.2658 1.2695 -0.31% -0.62% +1.2695 +1.2649
Aussie/Dollar $0.7364 $0.7354 +0.14% -4.27% +$0.7374 +$0.7337
Euro/Swiss 1.0866 1.0839 +0.25% +0.00% +1.0880 +1.0839
Euro/Sterling 0.8526 0.8538 -0.14% +0.00% +0.8540 +0.8511
NZ $0.7113 $0.7127 -0.19% -0.95% +$0.7120 +$0.7098
Dollar/Dollar
Dollar/Norway 8.6475 8.6685 -0.21% +0.74% +8.6975 +8.6300
Euro/Norway 10.2077 10.2290 -0.21% -2.48% +10.2455 +10.1720
Dollar/Sweden 8.6222 8.6310 -0.11% +5.20% +8.6591 +8.6224
Euro/Sweden 10.1775 10.1890 -0.11% +1.00% +10.2024 +10.1740
(Reporting by Gertrude Chavez-Dreyfuss in New York and Iain Withers in London; Additional reporting by Saikat Chatterjee in London and Tom Westbrook in Singapore; Editing by Angus MacSwan and Will Dunham)
By Gertrude Chavez-Dreyfuss and Iain Withers
NEW YORK/LONDON (Reuters) -The dollar climbed to a two-week peak against a basket of major currencies on Monday, as investors continued to price in expectations that the U.S. Federal Reserve could reduce its asset purchases sooner rather than later despite a surge in COVID-19 cases.
The dollar index earlier rose to 92.887, its highest level since Aug. 27. It was last up 0.1% at 92.707.
A flurry of U.S. economic data is due out this week, starting with U.S. consumer price data on Tuesday, which will give a broad picture of the economy’s progress ahead of the Fed meeting next week.
The Philadelphia Fed President Patrick Harker became the latest official to say he wants the central bank to start tapering this year, saying in a Nikkei interview that he was keen to scale back asset purchases.
“The dollar is off to a quick start to the week on expectations that U.S. data this week, while likely mixed, could cement the case for the Fed to taper stimulus next quarter,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
Manimbo added that stubbornly high inflation would add to tapering expectations.
Tapering typically benefits the dollar as it means a step toward tightening monetary policy. It also means the Fed will be buying less debt assets, which suggests that there will be less dollars in circulation.
The Wall Street Journal reported on Friday that Fed officials will seek to make an agreement to begin paring bond purchases in November.
Retail sales and productions figures also are slated for later this week.
The euro was among the currencies to lose ground to the dollar, dipping to $1.1770, its lowest level in a little over two weeks, after the European Central Bank said last week it would start to trim its own emergency bond purchases. The euro was last down 0.1% at $1.1799.
Against the yen, the dollar was little changed at 109.95 yen.
“A couple of dynamics favor the dollar,” said Rodrigo Catril, senior currency strategist at National Australia Bank in Sydney.
“Re-opening still faces challenges from the consumer, who is cautious, and from bottlenecks which restrict ability for the economy to rebound with some gusto. At the same time rising infections suggest we may still need to reintroduce restrictions of some sort. The other thing is that the Fed continues to signal that tapering is coming,” Catril added.
In the cryptocurrency market, bitcoin was down 3.1% at $44,567.
========================================================
Currency bid prices at 10:05AM (1405 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index 92.6500 92.6300 +0.03% 2.966% +92.8870 +92.6170
Euro/Dollar $1.1802 $1.1812 -0.08% -3.40% +$1.1814 +$1.1771
Dollar/Yen 109.9200 109.9150 +0.01% +6.39% +110.1550 +109.8600
Euro/Yen 129.72 129.79 -0.05% +2.21% +129.8600 +129.5900
Dollar/Swiss 0.9208 0.9181 +0.33% +4.11% +0.9241 +0.9182
Sterling/Dollar $1.3838 $1.3831 +0.07% +1.31% +$1.3845 +$1.3797
Dollar/Canadian 1.2658 1.2695 -0.31% -0.62% +1.2695 +1.2649
Aussie/Dollar $0.7364 $0.7354 +0.14% -4.27% +$0.7374 +$0.7337
Euro/Swiss 1.0866 1.0839 +0.25% +0.00% +1.0880 +1.0839
Euro/Sterling 0.8526 0.8538 -0.14% +0.00% +0.8540 +0.8511
NZ $0.7113 $0.7127 -0.19% -0.95% +$0.7120 +$0.7098
Dollar/Dollar
Dollar/Norway 8.6475 8.6685 -0.21% +0.74% +8.6975 +8.6300
Euro/Norway 10.2077 10.2290 -0.21% -2.48% +10.2455 +10.1720
Dollar/Sweden 8.6222 8.6310 -0.11% +5.20% +8.6591 +8.6224
Euro/Sweden 10.1775 10.1890 -0.11% +1.00% +10.2024 +10.1740
(Reporting by Gertrude Chavez-Dreyfuss in New York and Iain Withers in London; Additional reporting by Saikat Chatterjee in London and Tom Westbrook in Singapore; Editing by Angus MacSwan and Will Dunham)