Dollar headed for weekly loss as investors brace for slower Fed hikes By Reuters
Economy 8 minutes ago (Nov 25, 2022 02:00)
© Reuters. FILE PHOTO: A picture illustration shows U.S. 100-dollar bank notes taken in Tokyo August 2, 2011. REUTERS/Yuriko Nakao/File Photo
By Rae Wee
SINGAPORE (Reuters) – The dollar stood close to a three-month low and was on track for a weekly loss on Friday, as the prospect of the Federal Reserve slowing monetary policy tightening as soon as December dominated investors’ minds and kept the mood buoyant.
Trading was thin overnight due to the Thanksgiving holiday in the United States, though most currencies extended their gains against a softer greenback before paring them slightly in early Asia trade.
Sterling rose more than 0.5% overnight and last stood at $1.21125, close to its over three-month high of $1.2153 hit in the previous session and on track for a nearly 2% weekly gain.
The Japanese yen jumped roughly 0.7% overnight, and last bought 138.60 per dollar.
Minutes from the Fed’s November meeting released earlier this week showed that a “substantial majority” of policymakers agreed it would “likely soon be appropriate” to slow the pace of interest rate hikes — remarks that sent the greenback tumbling.
The Fed’s aggressive interest rate hikes and market expectations of how high the central bank could take them has been a huge driver of the dollar’s 10% surge this year.
“We’ve still got the third successive day of positive risk sentiment… I think that is keeping the U.S. dollar subdued pretty much across the board,” said Ray Attrill, head of FX strategy at National Australia Bank.
Against a basket of currencies, the U.S. dollar index stood at 105.94, testing its three-month trough of 105.30 hit last week. It was headed for a weekly loss of nearly 1%.
Also aiding risk sentiment slightly was a survey that showed that German business morale rose further than expected in November.
European Central Bank (ECB) policymakers fear that inflation may be getting entrenched in the euro zone, accounts of its October meeting showed overnight. However, markets are now expecting a more modest, 50 bp move at the December meeting.
The euro was 0.06% lower at $1.04045, but remained close to $1.0481, its highest level in over four months hit last week.
“We have the euro zone inflation numbers next week, so I think they are going to be a big test of market pricing … were we to get another upside surprise on that, then I think that would bring 75 bp back on the agenda,” said Attrill.
The New Zealand dollar was headed for a weekly gain of more than 1.5%, aided by the Reserve Bank of New Zealand’s 75 bp rate hike earlier in the week and its hawkish rate outlook.
Over in China, markets were also closely watching an impending cut in banks’ reserve requirement ratio (RRR).
China will use timely cuts in banks’ RRR, alongside other monetary policy tools, to keep liquidity reasonably ample, state media quoted a cabinet meeting as saying.
“We believe it’s likely the PBoC (People’s Bank of China) may cut RRR by 25 bp for most banks in the next couple of weeks (or even days),” said analysts at Nomura.
“That being said, the RRR is likely to only have a limited positive impact, as we believe the real hurdle for the economy lies in local officials’ more zealous implementation of Covid restrictions rather than insufficient loanable funds.”
The Chinese offshore yuan was last 0.1% lower at 7.1759 per dollar.
Dollar headed for weekly loss as investors brace for slower Fed hikes
By Marc Jones LONDON (Reuters) -Ukraine’s Finance Minister Serhiy Marchenko has said more Western support is needed to help it meet its growing reconstruction costs following this…
By Geoffrey Smith
Investing.com — It looks like the verdict’s in: 2023 will be the year that bonds give equities the kicking that they’ve been asking for these last 12 years.
By Foo Yun Chee BRUSSELS (Reuters) – Twitter’s decision to shut down its Brussels office and the laying off of thousands of employees are drawing concerns on whether the company…
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.