U.S. Dollar Ends Higher On Risk Aversion After Bailey’s Gilts Comments
2022.10.12 13:57
Despite retreating initially in New York morning on a rebound in U.S. stocks, later rallied across the board. It ended higher against most of its peers on Tuesday as BOE official reiterated that the central bank would end its bond-buying program on Friday, triggering renewed risk aversion.
Versus the , the dollar traded with a firm bias in Asia and rallied to 145.86 ahead of the European open. Despite falling to session lows at 145.43 in New York morning, the pair erased its losses and rallied on renewed USD strength to session highs of 145.89 near the close.
The met renewed selling at 0.9722 at the Asian open and fell to a 10-day trough at 0.9672 in Asia. The pair then erased its losses and rose to an intra-day high at 0.9774 in New York morning on USD’s weakness due to a rebound in U.S. stocks but only to retreat sharply to 0.9695 on ‘pound-led’ USD strength before stabilizing.
The also retreated initially in Asia to 1.0999 at the European open. Despite rising to session highs at 1.1180 in New York morning on USD’s retreat, cable then erased its gains and tumbled to an intra-day low of 1.0954 near the close on cross-selling in sterling on BoE Bailey’s gilts comments.
Reuters reported Bank of England Governor Andrew Bailey said on Tuesday that British pension funds and other investors hit hard by a slump in bond prices had just three days left to fix their problems before the central bank would withdraw support.
Only hours earlier, the BoE expanded its program of daily bond purchases to include inflation-linked debt, citing a “material risk” to British financial stability and “the prospect of self-reinforcing ‘fire sale’ dynamics.” But speaking in Washington late in the day, Bailey was clear that he had no intention of extending purchases of bonds beyond Friday when they are due to stop.
