Dollar continues to strengthen in American trading session
2023.01.03 09:41
Dollar continues to strengthen in American trading session
Budrigannews.com – As German inflation eased in December, the euro was on track for its biggest one-day drop since September. Meanwhile, the dollar rose to a two-week high as attention turned to the Federal Reserve’s December meeting minutes.
At $1.0526, the euro was down approximately 1.3 percent against the dollar. This was the lowest level since December 12 and was on track for its biggest daily decline since September 23 of last year.
According to German state inflation data, price pressures decreased in December, suggesting that national inflation may have slowed for a second month as a result of the government’s one-time payment of energy bills to households.
In a note, Scotiabank chief currency strategist Shaun Osborne stated, “The EUR is under-performing somewhat on the session, with the weaker than expected data likely weighing on sentiment.”
Osborne added, “Near-term, corrective EUR losses could extend to the region of 1.03/1.04 before renewed buying pressure develops.” He noticed that the German expansion figures would improbable hinder the ECB from chasing after a generally forceful fixing strategy in the following couple of months.
At 1300 GMT, preliminary German December data are due.
This week, investors are also paying attention to the minutes of the Fed’s December meeting, which will be released on Wednesday. Traders are looking for clues about the likely direction of the rate.
After four consecutive 75-basis point increases, the U.S. central bank raised interest rates by 50 basis points last month. However, the central bank has stated that it may need to keep interest rates higher for a longer period of time in order to control inflation.
Niels Christensen, chief analyst for Nordea, stated, “The Fed was hawkish but the market didn’t buy into it.”
Christensen went on to say, “The market is pricing in cuts toward the end of this year, and that’s not the message from the Fed as we see it.”
The, which compares the US dollar to six major currencies, including the euro, was up 1.1% at 104.82 at the time of writing. The Fed raised interest rates to combat inflation last year, resulting in the index’s largest annual increase since 2015.
The yen, which reached its highest level in seven months during Asian trading hours, was last seen trading at 130.83 per dollar.
When the Bank of Japan increased the yield cap range on 10-year Japanese government bonds in December, it stoked speculation that the central bank was about to begin easing from its ultra-loose policy.
A report on Saturday that the BOJ was considering raising its inflation forecasts in January to show price growth close to its 2% target in fiscal 2023 and 2024 contributed to the yen reaching its highest level against the dollar since June 1 of last year. This was further fueled by the report.
Christensen of Nordea stated, “The move by the BOJ was definitely a game changer and the reaction was very swift.”
“The dollar-yen will continue to fall because everything points to less relaxed policy in Japan.”
In 2022, the Japanese yen fell 12 percent against the dollar, prompting the government to intervene in the market for the first time since 1998 in September and again in October, when it fell to a 32-year low of 151.94 yen per dollar.
Authentic was last exchanging at $1.1933, down 1% on the day, momentarily hitting its most minimal level since Nov. 30 last year.
Meanwhile, COVID-19 infections swept through production lines following Beijing’s abrupt reversal of anti-virus measures, causing factory activity in China to decline for the third consecutive month in December and at the sharpest rate in nearly three years.
Both the Australian and New Zealand dollars, which are affected by the growth outlook for China, decreased by approximately 1.5% against the US dollar.
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