U.S. Dollar Holds Steady as Interest Rate Hike Possibility Looms

One sentence summary – The US dollar remains strong as the Federal Reserve hints at further interest rate hikes, while concerns about slowing growth in Europe and potential interventions in Japan have impacted the euro and yen, and lowered expectations of interest rate hikes have negatively impacted the British pound.

At a glance

  • The U.S. dollar has held steady and is ending the week on a strong note.
  • Federal Reserve Chair, Jerome Powell, hints at further interest rate hikes to combat inflation.
  • The U.S. dollar index has risen by 0.21% to hit 104.20, marking the sixth week of consecutive gains.
  • Weak business activity data has affected the euro and sterling, causing investors to scale back bets on rate hikes in Europe and Britain.
  • The British pound has fallen to a 10-week low due to diminished expectations of the Bank of England’s interest rate peak.

The details

The U.S. dollar has held steady in recent market developments, showing signs of ending the week on a strong note.

Federal Reserve Chair, Jerome Powell, has hinted at the possibility of further interest rate hikes to combat inflation.

Powell stressed that a decision is yet to be made on whether the current benchmark interest rate is adequate to bring inflation back to the 2% target.

The U.S. dollar index, which gauges the currency against six major counterparts, has risen by 0.21% to hit 104.20.

This increase marks the sixth week of consecutive gains, buoyed by signs of a resilient U.S. economy.

Despite Powell’s speech being perceived as less hawkish than expected by the markets, interest rate futures indicate a higher probability of tightening at either the November or December policy meetings.

Strategists at BofA Global Research forecast an additional 25 basis point hike in November, followed by 75 basis points of cuts in 2023.

This prediction comes amid weak business activity data, which has affected the euro and sterling, causing investors to scale back their bets on further rate hikes in the euro area and Britain.

European Central Bank (ECB) policymakers have voiced concerns about weakening growth prospects, and momentum is building for a pause in interest rate hikes.

German business sentiment has fallen more than expected, sparking fears of a possible second recession.

As a result, the euro has seen a 0.16% drop against the dollar, currently trading at $1.0792.

In Japan, the yen is facing pressure as traders keep an eye out for signs of potential government intervention.

Concurrently, the dollar has gained 0.38% against the yen, hitting 146.42.

The British pound has taken a hit, falling to a 10-week low due to diminished expectations of the Bank of England’s interest rate peak.

At present, the pound is down 0.17%, trading at $1.2578.

The U.S. dollar continues to show strength, bolstered by the potential for additional interest rate hikes by the Federal Reserve.

However, concerns about slowing growth in Europe and possible interventions in Japan have affected the euro and yen respectively.

The British pound, meanwhile, has been negatively impacted due to lowered expectations of interest rate hikes in the United Kingdom.

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cnbc.com
– The U.S. dollar is holding steady and is on track to finish the week strong.
– Federal Reserve Chair Jerome Powell stated that the central bank may need to raise interest rates further to control inflation.
– Powell emphasized that the central bank has not yet determined if its benchmark interest rate is high enough to ensure inflation returns to the 2% target.
The U.S. dollar index, which measures the currency against six major counterparts, increased by 0.21% to 104.20.
The index is set for its sixth consecutive week of gains, supported by signs of resilience in the U.S. economy.
– Powell’s speech was seen as less hawkish than expected by markets.
– Interest rate futures indicate a higher likelihood of tightening at either the November or December policy meetings.
– BofA Global Research strategists predict one more 25 basis point hike in November and 75 basis points of cuts next year.
– Weak business activity data has impacted the euro and sterling, leading investors to reduce bets on further rate hikes in the euro area and Britain.
– ECB policymakers are concerned about weakening growth prospects, and there is growing momentum for a pause in interest rate increases.
– German business sentiment has deteriorated more than anticipated, raising concerns of a potential second recession.
The euro is 0.16% lower against the dollar at $1.0792.
The yen is under pressure as traders monitor for signs of potential intervention by the Japanese government.
The dollar is up 0.38% against the yen at 146.42.
The British pound dropped to a 10-week low due to reduced expectations of the peak of the Bank of England’s interest rate.
The pound is 0.17% lower at $1.2578.

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