Ahead of next week’s inflation data, investors took advantage of the U.S. dollar’s strength against other major currencies to take advantage of profits to close their positions. The U.S. dollar index fell to a one-week low on Friday (Nov 9), closing the week in the black for the first time in four weeks.
In late New York trading, the ICE U.S. Dollar Index (DXY), which tracks the U.S. dollar against six major currencies, fell 0.67 percent to 108.97, with the DXY dropping as low as 108.36 during the session, hitting a more than one-week low. It fell 0.5% this week.
Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets, said: “The dollar may be thin ahead of the FOMC meeting, and after observation, the market sees this as a good time to take profits, although the process has led to the dollar Lower, but the strong dollar trend has not reversed.”
The U.S. dollar has been strong against other major currencies this week, hitting a 24-year high against the yen, a 37-year high against the pound and a more than 20-year high against the U.S. dollar index.
At present, the market estimates that the probability of the Fed raising interest rates by 3 yards this month is 87%. Next week’s consumer price index (CPI) data will be closely watched by the market. Capital Economics expects that the US CPI will continue to decline slightly in August.
“We think the decline in inflation is in line with our view, and this backdrop remains positive for the dollar, which will benefit from higher real interest rates amid a global slowdown,” said Jonathan Petersen, market economist at Capital Economics. ”
After the European Central Bank (ECB) announced a 3-yard rate hike, the euro rose to a three-week high on Friday, as high as $1.0113, up 0.43% to $1.0040 by the time of writing.
Samy Chaar, chief economist at Lombard Odier, said: “European bond yields have been supported after the ECB decision as expected. All ECB policy tools are hawkish. On the other hand, U.S. bond yields are falling slightly. Taken together, that could be the reason for the dollar’s pullback.”
Still, Europe’s economic outlook remains weak, with high energy prices weighing heavily on households and businesses. At an emergency meeting on Friday, EU energy ministers remained divided on whether to impose a price cap on Russian natural gas.
Other risk currencies broadly recovered as sentiment improved later in the week, with GBP/USD up 0.77% to $1.1586.
Queen Elizabeth II passed away a few days ago, and the Bank of England announced that the monetary policy meeting originally scheduled for next week will be postponed for a week because of the royal mourning period.
The yen rebounded from a 24-year low and rose 1.08% against the dollar to 142.56 per dollar, its biggest one-day gain in a month.
Bank of Japan Governor Haruhiko Kuroda met with Prime Minister Fumio Kishida on Friday to brief the prime minister on the recent wild swings in the yen. In response to the depreciation of the yen, Haruhiko Kuroda believes that violent exchange rate fluctuations are not a good thing, and promises to continue to pay close attention to foreign exchange market trends in the future.
The Australian dollar rose 1.37% to $0.6840, also posting its biggest one-day gain in a month. The New Zealand dollar was up 0.79% at $0.6102.
Improved market sentiment also benefited cryptocurrencies, with bitcoin up 10% to $21,286, its highest since late August, while ethereum rose nearly 5% to $1,715.
As of Saturday (10th) Taiwan time about 6:00 Price:
The dollar index was at 109.0194. -0.5945% The euro against the US dollar (EUR/USD) was quoted at $1.0039 per euro. +0.4302% GBP/USD (GBP/USD) was quoted at $1.1586. +0.7566% The Australian dollar against the US dollar (AUD/USD) was quoted at 1 AUD=0.6840. +1.3784% The US dollar against the Canadian dollar (USD/CAD) was quoted at 1.3024 Canadian dollars per US dollar. -0.4890% The U.S. dollar against the Japanese yen (USD/JPY) was quoted at 142.56 yen per dollar. -1.0756%