Image: Reuters Berita 24 English - As a broad wave of risk aversion raced across global markets on Friday, the U.S. dollar stayed steady at ...
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| Image: Reuters |
Berita 24 English - As a broad wave of risk aversion raced across global markets on Friday, the U.S. dollar stayed steady at a two-decade high, with traders teasing the idea of a 100 basis point rate hike by the Federal Reserve later this month.
A bombardment of unfavourable news over the previous 24 hours dragged on sentiment and put weight on currencies seen as riskier, such as the Australian dollar and the British pound.
The dollar increased to its highest levels against a basket of its competitors since September 2002 over 109 as China's GDP in the second quarter sank more than anticipated, Italy faced a fresh political crisis, and the U.S. banking earnings season got off to a shaky start.
According to ING analysts, "a stabilisation in the dollar around present levels is possible today, but we continue to highlight: a) limited headroom for a correction; and b) a balance of risks still slanted to the upside in the near term."
After data on Wednesday revealed that U.S. consumer price inflation is accelerating at the fastest rate in four decades, traders increased their bets that the Fed will opt for a super-sized tightening at their meeting on July 26–27, putting the greenback on track for its third straight week of gains.
These wagers were reduced after St. Louis Fed President James Bullard and Fed Governor Christopher Waller both stated that they preferred another 75 bps raise for this month despite the inflation data.
Following a second day of recovery from below parity on Thursday, the euro was unchanged at $1.0026.
After Italian Prime Minister Mario Draghi volunteered to retire, but the country's president rejected his resignation, the euro fell as low as $0.9952.
The dismal statistics cast doubt on this year's economic growth objective, and the Chinese yuan maintained at a two-month low versus the dollar as it appeared headed for its largest weekly decline since May.
