As the market digested expectations of sharp interest rate hikes by the Federal Reserve (Fed) and the European Central Bank (ECB), the dollar index was almost flat on Tuesday (30th), and the euro rose against the dollar for two consecutive days, returning to above parity levels.
The ICE U.S. Dollar Index (DXY), which tracks the greenback against six major currencies, was down 0.01 percent at 108.83 in late New York trading, after reaching an intraday high of 109.11, still below yesterday’s 20-year high.
U.S. JOLTs posted an unexpected increase in job vacancies in July, economic data showed, and the previous month’s data was revised up sharply, suggesting the economy’s performance was strong even as gross domestic product (GDP) contracted for two consecutive quarters.
“This is a key component of the labor market that will help the Fed justify aggressive rate hikes,” said Edward Moya, market analyst at Oanda. “If Americans have a job choice, the Fed can ignore other rapidly deteriorating economic data.” “
Other data showed that U.S. consumer confidence rebounded more than expected in August, reversing three straight months of declines and providing a positive signal for consumer spending.
About an hour before the data was released on Tuesday, traders increased their bets on a three-point rate hike by the Fed next month, raising the odds to 74.5% from around 66.5% previously. Some traders had been betting the Fed would shift to a more accommodative policy stance early next year, but expressed concern over the policy shift after Jerome Powell said last week that he would continue raising interest rates and that rates would remain high for some time to come. Hope is dashed.
In addition, several Fed officials on Tuesday reiterated their determination to fight inflation. New York Fed President John Williams agreed that rates must reach at least 3.5% at some point to achieve the central bank’s target; at a separate event, Richmond Fed President Thomas Barkin was equally adamant , the central bank will make every effort to bring inflation back to the target level of 2%, continuing the hawkish attitude of the central bank’s annual meeting in Jackson Hole.
Next, the market will focus on the August non-farm payrolls data released on Friday (2nd), once there is any sign that labor demand is cooling, it will help ease the pressure on the Fed to insist on aggressive interest rate hikes.
The euro strengthened for the second day in a row, rising 0.18% against the dollar to $1.0016, above par.
German inflation rose to its highest level in nearly 50 years in August, economic data showed, surpassing a record high set three months ago and strengthening the case for the European Central Bank (ECB) to extend interest rate hikes next month.
Aggressive pricing of ECB rate hike expectations combined with a slide in natural gas prices have driven the euro higher over the past few sessions, said John Hardy, head of FX strategy at Saxo Bank. Wholesale gas prices in Britain and the Netherlands eased on Tuesday after Europe almost reached its 80% gas reserve target.
Sterling was down 0.43% against the dollar at $1.1653 since returning from the holidays; dollar-yen edged up 0.01% to 138.69 yen.
In the cryptocurrency segment, hawkish rhetoric on inflation and an economic slowdown continued to weigh on riskier assets, with Bitcoin falling below the $20,000 barrier again on Tuesday, Ripple (XRP), Dogecoin and Lite Litecoin fell in sync, while ether edged up 0.4% to around $1,551.
Arcane Research analyst Vetle Lunde said in a report that with inflation far out of control, economic headwinds will continue to weigh on cryptocurrencies, and the Fed’s policy may not turn too soon, the dynamics of the general environment will be difficult to control in the next few years. .
As of Wednesday (31st) Taiwan time about 6:00 Price:
The dollar index was at 108.8341. +0.0598% The euro against the US dollar (EUR/USD) was quoted at 1 EUR = 1.0011 USD. +0.1300% GBP/USD (GBP/USD) was quoted at $1.1647. -0.5040% The Australian dollar against the US dollar (AUD/USD) was quoted at 1 Australian dollar at 0.6851. -0.7389% The US dollar against the Canadian dollar (USD/CAD) was quoted at 1.3090 Canadian dollars per US dollar. +0.6536% The U.S. dollar was quoted at 138.76 yen against the Japanese yen (USD/JPY). +0.0505%