NEW YORK: The dollar rose to a one-year high against major currencies on Wednesday, fueled by a reduction in asset purchases by the US Federal Reserve beginning in November and expectations of a possible hike in interest rates towards the end of 2022.
The greenback also fared well despite the impasse in Washington over a US debt limit, which threatened to shut down the government.
The world’s largest reserve currency, seen as a safe haven during times of market tension, has strengthened in recent days as investors focused on fears of a global recession, rising energy prices and higher US Treasury yields. is focused.
Traders are also concerned that the Fed will begin to withdraw policy support as global growth slows.
“The Fed raises the starting gun on monetary policy normalization,” wrote Société Generale’s macro strategist Kit Jux in his latest research note.
“As the US escapes the interest rate zero-bound, leaving the eurozone and Japan behind, the global savings glut is set to be drawn to the dollar, which could outperform the majority of other currencies in the coming year, and its The move could start earlier than we expected,” he said.
The dollar index – which measures the US currency against a basket of six major currencies – rose for the fourth day in a row to 94.112, its highest level since early November last year. It was last up 0.4% at 94.115.
Eric Nelson, a macro strategist at Wells Fargo in New York, sees the dollar index rising 2% to 3%.
The greenback was unfazed, even as US Senate Republicans on Tuesday blocked a bid by Democrats from President Joe Biden to close a potentially crippling US credit default, due to end Thursday in federal finances. With nutrition and lending authorization on about 18 October.
Senate Democratic Leader Chuck Schumer said the Senate could vote on a bipartisan resolution Wednesday or Thursday to fund federal operations in early December.
The euro was one of the currencies to fall below the $1.16 level, its lowest since July 2020. It last traded down 0.7% at $1.1596.
Yen showed little reaction to the election of Fumio Kishida as leader of Japan’s ruling Liberal Democratic Party, which propelled him to become the country’s next prime minister.
The yen, the currency most sensitive to US yields as higher rates could attract inflows from Japan, hit an 18-month low against a resurgent dollar. The dollar climbed to a high of 112.04, its strongest level since late February last year, and was up 0.4% at 111.99 yen.
Currency traders also took note of comments from prominent central bankers on Wednesday, who were panelists at a European Central Bank forum in Sintra, Portugal.
Fed President Jerome Powell, European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey said they were closely watching inflation amid rising energy prices and persisting production constraints.
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Currency Bid Price 3:29 PM (1929 GMT)
Details RIC Last US Close PCT Change YTD PCT High Bid Low Bid
last change
Session
Dollar Index 94.3810 93.7060 +0.73% 4.890% +94.4350 +93.6710
EUR/dollar $1.1594 $1.1684 -0.76% -5.10% +$1.1690 +$1.1590
Dollar / Yen 111.9950 111.5150 + 0.43% + 8.40% +112.0450 +111.2100
Euro/Yen 129.85 130.25 -0.31% +2.31% +130.4700 +129.6800
Dollar/Swiss 0.9348 0.9293 +0.59% +5.66% +0.9355 +0.9281
Sterling/Dollar $1.3426 $1.3536 -0.81% -1.72% +$1.3554 +$1.3412
Dollar/Canadian 1.2754 1.2686 +0.54% +0.16% +1.2774 +1.2670
Australian/Dollar $0.7181 $0.7240 -0.79% -6.62% +$0.7264 +$0.7173
Euro/Swiss 1.0839 1.0855 -0.15% +0.30% +1.0862 +1.0822
Euro/Sterling 0.8633 0.8629 +0.05% -3.40% +0.8658 +0.8613
New Zealand $0.6864 $0.6960 -1.38% -4.41% +$0.6962 +$0.6861
dollar/dollar
Dollar/Norway 8.7680 8.6605 +1.13% +1.99% +8.7760 +8.6460
Euro/Norway 10.1678 10.1219 +0.45% -2.86% +10.1815 +10.0980
Dollar/Sweden 8.8072 8.7334 +0.06% +7.45% +8.8112 +8.7233
Euro/Sweden 10.2116 10.2055 +0.06% +1.34% +10.2175 +10.1816
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