FOREX-Dollar Rises As Markets Digest News From Central Bank, Look To Year End
By David Henry and Iain Withers
NEW YORK / LONDON, December 17 (Reuters) – The dollar rose on Friday as markets approached the end of a busy week in which major central banks presented plans to lift the pandemic-era stimulus measures.
The greenback got a boost in morning trading in New York after a Federal Reserve official said in a TV interview that the Fed would gain “optionality” to raise interest rates in 2022 by putting end of bond purchases by March.
Central banks are moving at different speeds to adjust their monetary policies, highlighting deep uncertainties about how the rapidly spreading variant of the Omicron coronavirus will hit the global economy and how high and persistent inflation will be.
The dollar index = USD was up 0.2% on the day to 96.1970. The Euro and British Pound fell around 0.3% after the previous two days’ gains to settle at $ 1.1299 EUR = EBS and $ 1.3284, GBP = D3 respectively, at 1454 GMT.
Fed official John Williams, chairman of the Federal Reserve Bank of New York, appeared on CNBC in one of the few events scheduled for Friday on market interest after two intense days of central bank meetings and comments on monetary policies and economies.
With the meetings over, “we believe there will be little informative value in price action in the coming days,” TD Securities strategists said in a note to clients.
âThe USD may consolidate until the end of the year as the forex markets remove some residual excess positioning / value,â they added.
While the dollar index on Friday was down about 0.7% from November’s high, it is still up 7% since May.
The Bank of England on Thursday became the first G7 economy to hike rates since the pandemic while the European Central Bank announced the end of its emergency pandemic asset purchase program next March, while promising plentiful support for as long as needed via its long-running asset purchase program.
Their measures came after the Fed decided on Wednesday to end its bond purchases earlier than expected, paving the way for three quarter-percentage point interest rate hikes next year.
“It looks like the Fed forecasting three hikes for 2022 and (seemingly) optimistic about economic prosperity – even in the face of Omicron – has allowed other central banks to take a more belligerent turn,” Chris Weston, head of research at Pepperstone brokerage, wrote in a report.
Yen JPY = EBS appreciated against the dollar to 113.345. The Bank of Japan on Friday canceled its emergency pandemic funding, but maintained an ultra-accommodative policy, cementing expectations that it will remain among the more accommodating central banks.
Cryptocurrency bitcoin BTC = BTSP slipped 4% to $ 45,904.
Currency bid price at 9:54 am (1454 GMT)
US Close previous session
Percentage change for the current year
EUR = EBS
JPY = EBS
Euro / yen
CHF = EBS
Pound sterling / dollar
GBP = D3
CAD = D3
Australia / Dollar
AUD = D3
+ $ 0.7183
+ $ 0.7149
Euro / Switzerland
Euro / Pound
New Zealand dollar / Dollar
NZD = D3
+ $ 0.6801
+ $ 0.6755
Dollar / Norway
NOK = D3
Euro / Norway
Dollar / Sweden
Euro / Sweden
Global exchange rateshttps://tmsnrt.rs/2RBWI5E
(Reporting by David Henry in New York and Iain Withers in London Additional reporting by Kevin Buckland in Tokyo Editing by Kirsten Donovan, Andrew Heavens and Frances Kerry)
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