Dollar cuts losses as Powell signals bond cut
NEW YORK (Reuters) – The dollar cut losses on Friday after Federal Reserve Chairman Jerome Powell said the U.S. central bank is expected to start cutting asset purchases soon, but is not yet expected to increase prices. interest rate.
Powell said employment is still too low and high inflation will likely decline next year as pressures from the COVID-19 pandemic subside, although many market participants fear the rise. price pressure lasts longer than policymakers realize.
Investors have taken profits since the dollar index hit a year-long high last week, when fears that inflation will remain stubbornly high for longer led investors to anticipate when the Fed will raise its prices. rate for the first time until mid-2022.
Now, “there’s a bit of loosening in positioning, we’ve obviously seen a stronger dollar since the Fed in September,” said Mazen Issa, senior currency strategist at TD Securities in New York. “It also matches the dollar’s seasonal tendency to ease through the end of the month.”
The Fed said at its September meeting that it would likely start cutting its monthly bond purchases as early as November, and signaled that interest rate hikes could follow sooner than expected.
The dollar index fell 0.10% to 93.64, and is down from a one-year high of 94.56 last week. The euro gained 0.09% to $ 1.1636.
Data from Friday showed that business activity in the United States rose sharply in October, suggesting that economic growth picked up at the start of the fourth quarter as COVID-19 infections eased, although that labor and raw material shortages have hampered manufacturing.
The dollar rally has also faded as investors expect faster rate hikes in other currencies.
Issa, however, expects the dollar to regain strength, as global central banks oppose aggressive rate hikes revisions, while the Fed is expected to remain relatively hawkish and move forward with a cut. of its bond purchase program.
âOnce we get the pullback from other central banks and the Fed has made a commitment to gradually cut back, we should see really shallow dollar declines,â Issa said. The Australian dollar, which is a proxy for risk appetite, gave up on earlier gains and lost 0.05% for the last time to $ 0.7462.
The yen, a safe haven, appreciated, although it remains the worst performing, having fallen by nearly 10% this year. The dollar lost 0.50% for the last time against the Japanese currency at 113.42 yen.
Bitcoin fell 2.98% to $ 60,367. The cryptocurrency hit a record high of $ 67,017 on Wednesday, after the launch of the first exchange-traded fund to buy U.S. bitcoin futures.
Price of currency offers at 3:03 p.m. (1903 GMT)
Description RIC Last closure US Pct Change YTD Pct High Bid Low Bid
Dollar index 93.6380 93.7410 -0.10% 4.064% +93.7890 +93.5340
Euro / Dollar $ 1.1636 $ 1.1625 + 0.09% -4.76% + $ 1.1656 + $ 1.1621
Dollar / Yen 113.4200 114.0200 -0.50% + 9.84% +114.2000 +113.4400
Euro / yen 131.97 132.50 -0.40% + 3.98% +132.7900 +131.9300
Dollar / Switzerland 0.9162 0.9184 -0.24% + 3.56% +0.9185 +0.9152
Sterling / Dollar $ 1.3754 $ 1.3792 -0.27% + 0.68% +1.3815 $ +1.3736
Dollar / Canadian 1.2370 1.2371 + 0.00% -2.85% +1.2390 +1.2321
Aussie / Dollar $ 0.7462 $ 0.7466 -0.05% -2.99% + $ 0.7512 + $ 0.7454
Euro / Switzerland 1.0660 1.0673 -0.12% -1.36% +1.0682 +1.0659
Euro / Sterling 0.8458 0.8423 + 0.42% -5.36% +0.8468 +0.8422
NZ $ 0.7142 $ 0.7157 -0.17% -0.51% + $ 0.7188 + $ 0.7133
Dollar / Norway 8.3595 8.3690 -0.14% -2.68% +8.3790 +8.3235
Euro / Norway 9.7295 9.7145 + 0.15% -7.05% +9.7452 +9.6890
Dollar / Sweden 8.5751 8.6029 -0.19% + 4.62% +8.6145 +8.5615
Euro / Sweden 9.9781 9.9973 -0.19% -0.98% + 10.0050 +9.9712
Reporting by Karen Brettell; Editing by Susan Fenton and Jonathan Oatis