FedFuelled Dollar Forces Rival Currencies onto Back Foot

0
104

The dollar was headed for its best week in nearly nine months on Friday, with rival currencies struggling to shake the pressure exerted by the Federal Reserves sudden hawkish shift in tone.

With investors also scrambling to price in a soonerthanexpected tapering of extraordinary U.S. monetary stimulus, the euro and the yen failed to recoup losses of the last two days.

Hovering around 1.19, the euro was flat against the dollar and on course for its worse week since October with a 1.6 fall.

With a dovish European Central Bank seemingly far behind the Fed in the monetary policy cycle, traders will be reluctant to buy euros against dollars.

The U.S. central bank is one step ahead and as a result USD is likely to remain well supported against the EUR, Commerzbank strategists said in their Daily Currency Briefing.

As no important data is due for publication today or at the start of next week, the FX market is likely to feel mainly the aftereffects of the Fed meeting, they added.

With investors busy closing short positions since the Fed meeting, the dollar index hit a more than twomonth high of 92.010, and is on track for a 1.6 weekly gain, its largest since September.

At 0810 GMT, the dollar index was up 0.01 at 91.887.

The greenback is also on track for a 0.4 rise against the yen, which sat at 110.02 per dollar after hitting an 11week low of 110.82. It was little moved by the Bank of Japan keeping its main policy settings steady, as expected.

Meanwhile the Australian…

LEAVE A REPLY

Please enter your comment!
Please enter your name here