The dollar has fallen as the Fed’s policy decisions approach


New York / London — Monday’s dollar is major after recording the largest daily rise in more than four months in the previous session as hedge funds cut bearish bets prior to this week’s long-awaited US Federal Reserve Policy Conference Relaxed against new rivals.

With a focus on monetary policy in the United States, Australia and the United Kingdom, the Federal Reserve Board is widely expected to announce a tapering of stimulus measures that have helped boost greenbacks in recent weeks. increase.

Rapid inflation data has led some investment banks, such as Goldman Sachs, to raise expectations of the Fed’s rate hike as early as July 2022, compared to the third quarter of 2023.

The dollar index, which measures the US currency against six rivals, fell 0.098% at 94.104, approaching Friday’s peak of 94.302, the highest since October 13.

Joseph Trevisani, Senior Analyst at FXStreet.com, said: “No one is sure what the Fed is trying to do.”

Greenbacks surged 0.8% on Friday. This was the largest one-day surge since mid-June, after the Fed’s recommended inflation index, the government’s core consumer spending index, surged 4.4%. Mid next year.

Money markets have a 50% chance of the Fed raising rates by 25 basis points by June next year, compared to 15% last month, according to CME futures data.

Epoch Times Photo
Photographs of US dollars, Swiss francs, British pounds and euro banknotes taken in Warsaw on January 26, 2011. (Kacper Pempel / Reuters)

The euro rose 0.04% to $ 1.15665 after abandoning most of the European Central Bank’s policy interests, reaching $ 1.1535 on Friday, the lowest since October 13.

Stephen Jen, hedge fund manager at Eurizon SLJ Capital, said in a note to clients that the FX market appears to be too hawkish in the ECB and too dovish in the Fed.

“I believe the euro will remain vulnerable to the dollar over the coming months and quarters due to the large overhang of the long euro position among the real money community,” he said.

The Reserve Bank of Australia also decided on Tuesday, challenging the central bank’s claim that interest rates will not rise until 2024.

The Australian dollar fell 0.01% to $ 0.7521, down from its nearly four-month high of $ 0.75555 last week.

The pound sterling hit a low against the dollar in more than two weeks, pressured by uncertainty over the Bank of England’s policy stance and escalating spats with France against Britain’s post-EU fish.

Most people expect the Bank of England to raise interest rates by 15 basis points to 0.25% on Thursday, but a split vote is likely to take place and the banks will ignite and be content with hawkish cues. Some people think it’s possible.

By John McCrank and Saikat Chatterjee

Reuters

follow

EPOCH TV
Posted on