Tuesday, October 19, 2021
HomeBusinessDollar pauses after rising to year-highs earlier in week By Reuters

Dollar pauses after rising to year-highs earlier in week By Reuters



By Kevin Buckland

TOKYO (Reuters) – The dollar hit its lowest level this week against major peers on Thursday, taking a breather from a rally that had lifted it to a one-year high on expectations of faster rate hikes. Federal Reserve interest.

El, which measures the coin against six rivals, held steady at 94.016, after falling 0.53% on Wednesday, the most since Aug. 23.

The index hit 94,563 on Tuesday, its highest level since late September 2020, after rising nearly 3% since the beginning of last month.

The dollar retreated even after minutes from the September meeting of the Federal Open Market Committee confirmed that the gradual reduction of the stimulus will surely begin this year, and showed that a growing number of lawmakers are concerned that high inflation may persist.

A report from the Labor Department showed that U.S. consumer prices rose solidly in September, and are likely to rise further amid a surge in energy prices, which could put pressure on the Fed to take action sooner to normalize policy.

The US 5-year 5-year ahead equilibrium inflation rate, one of the closest indicators of long-term inflation expectations, rose to its highest level in seven years at 2.59%. From overnight.

Most Fed officials, including Chairman Jerome Powell, have argued so far that price pressures will be transitory.

The money markets are currently pricing in a 50/50 chance of a first rate hike of 25 basis points in July.

“The USD reaction may be an example of ‘buy the rumor, sell the fact,'” wrote Joseph Capurso, a strategist at the Commonwealth Bank of Australia (OTC :), in a note to a client.

“We consider the FOMC’s assumption of a temporary peak in inflation to be incorrect. In our opinion, a more aggressive tightening cycle will support the dollar.”

The dollar was up 0.11% to 113.37 yen, but back from a three-year high of 113.80 yen reached overnight.

The euro was mostly flat since Wednesday at $ 1.1599, but previously touched $ 1.1601 for the first time since October. 5.

The pound changed little to $ 1.3665, maintaining the advance of 0.55% on Wednesday and close to its highest level this month.

it rose to touch a five-month peak at $ 58,300.

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