The dollar surged to a one-year high against major currencies on Wednesday, boosted by heightened expectations of a reduction in U.S. Federal Reserve asset purchases from November and a hike in interest rates. interest, possibly end of 2022.
The greenback also performed well despite a deadlock in Washington on the US debt ceiling that threatened to plunge the government into a shutdown.
The world’s largest reserve currency, seen as a safe haven in times of market stress, has strengthened in recent days as investors focus instead on fears of a global slowdown, rising prices energy and higher US Treasury yields.
Traders are also concerned that the Fed may start to withdraw political support just as global growth slows.
“The Fed has signaled the start of the normalization of monetary policy,” wrote Kit Juckes, macro-strategist at Societe Generale in his latest research note.
“As the United States escapes the zero interest rate, leaving the eurozone and Japan behind, the global savings glut is likely to be drawn into the dollar, which may outperform most other currencies over time. year to come, and could start its movement earlier than expected, ”he added.
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 since early November last year. It was up 0.4% to 94.115.
Erik Nelson, macro strategist at Wells Fargo in New York, sees a further 2-3% rise in the dollar index.
The greenback was also unfazed, even as Republicans in the U.S. Senate on Tuesday blocked an offer by Democrats under President Joe Biden to avoid a potentially crippling U.S. credit default, with federal funding set to expire Thursday and borrowing power towards the bank. October 18.
The Senate could vote Wednesday or Thursday on a bipartisan resolution to fund federal operations until early December, Senate Democratic Leader Chuck Schumer said.
The euro was one of the currencies to lose ground, falling below the level of $ 1.16, the lowest since the end of July 2020. It traded for the last time down 0.7% at $ 1.1596.
The yen reacted little to the election of Fumio Kishida as head of the ruling Liberal Democratic Party in Japan, which saw him become the country’s next prime minister.
The yen, the currency most sensitive to US yields because higher rates can attract inflows from Japan, hit an 18-month low against a resurgent dollar. The dollar climbed to 112.04, its highest level since late February last year, and rose 0.4% to 111.99 yen.
Currency traders also took note of comments from leading central bankers on Wednesday, who were panelists at a European Central Bank forum in Sintra, Portugal.
Fed Chairman Jerome Powell, European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey have said they are keeping a close watch on inflation amid soaring prices of the energy and persistent production bottlenecks.
Price of currency offers at 3:29 p.m. (1929 GMT)
Description RIC Last closure US Pct Change YTD Pct High Bid Low Bid
Dollar index 94.3810 93.7060 + 0.73% 4.890% +94.4350 +93.6710
Euro / 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 / Switzerland 0.9348 0.9293 + 0.59% + 5.66% +0.9355 +0.9281
Pound 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
Aussie / Dollar $ 0.7181 $ 0.7240 -0.79% -6.62% + $ 0.7264 + $ 0.7173
Euro / Switzerland 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
NZ $ 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