Image: Reuters Berita 24 English - On Thursday, several U.S. Federal Reserve officials pushed back against rumours that they might limit th...
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| Image: Reuters |
Berita 24 English - On Thursday, several U.S. Federal Reserve officials pushed back against rumours that they might limit the pace of interest rate increases, which helped the dollar gain ground. In contrast, the pound was unchanged ahead of a meeting of the Bank of England.
The dollar index, which compares the value of the dollar to those of six other currencies, had somewhat increased overnight but was unchanged in early trade at 106.39. This week, it increased by about 0.5 percent, reversing the two-week trend.
According to Sim Moh Siong, currency analyst at Bank of Singapore, "the dollar dropped last week after the (policy-setting) Federal Open Market Committee meeting because the market wanted to believe that the Fed was turning in a dovish direction due to slowing GDP."
This week, there have been a lot more speakers from the FOMC who have opposed this notion, all of whom have sang the same refrain: "We are not done, and you should expect additional rate hikes," he continued.
Mary Daly of the San Francisco Fed and Neel Kashkari of the Minneapolis Fed both expressed their desire to control excessive inflation overnight, echoing similar sentiments expressed by other officials the day before.
Even while the dollar index reached a two-decade high in July, according to a Reuters survey of analysts earlier this week, 70% said the dollar was still at its current cycle's apex.
The market is pricing in a 58 percent chance of a 50 basis point rate hike at the Fed's September meeting and a 42 percent possibility of an additional significant 75 basis point increase, according to CME's FedWatch tool.
Sim, however, said that the dollar's recent performance was mixed since riskier currencies have been supported by the increased risk sentiment, which has also aided U.S. market prices.
The Australian dollar, which had gained 0.46 percent the day before and was trading at $0.695 on Thursday morning, was attempting to climb back over the symbolic $0.7 level it had fallen from earlier in the week as a result of what appeared to be dovish comments from the central bank.
Ahead of a BOE meeting later on in the day, when most investors anticipate the central bank to hike rates by 50 basis points to 1.75 percent, the highest level since late 2008, Sterling was essentially unchanged at $1.2158.
The choice must be made by 1100 GMT.
The Japanese yen, which has borne the brunt of this week's dollar gains, recovered somewhat to 133.54 per dollar, while the euro was unchanged at $1.01635.
At $23,000, Bitcoin was marginally higher.
