September 30, 2021

USD Furiously Sinks Major Currencies To The Bottom Of The Ocean

 Market optimism for a reduction in asset purchases by the Federal Reserve (Fed) starting in November and a faster interest rate hike, has lifted the US dollar to a one -year high.

Against a basket of major currencies, the dollar index that measures the strength of the greenback dollar traded higher at 94.30.

Chairman Jerome Powell said in his speech at a forum organized by the European Central Bank (ECB), the US central bank is close to achieving its goal in jobs that will allow policymakers to start pulling back on its stimulus.

He also reiterated that the surge in inflation was due to temporary factors, but if it continued for a long period of time, the Fed would respond.

The greenback remained traded higher despite a U.S. Senate stalemate over a risky debt ceiling prompting a government shutdown. The Senate will vote again to get a deal on raising the debt limit.

The US dollar, which is considered a safe-haven currency when markets are at risk, has also strengthened in recent days as market concerns over rising energy prices have pushed up US bond yields higher.

Meanwhile, market sentiment was also weighed down by the issue of Evergrande failing to complete the payment of a coupon worth $ 45.2 million. The Chinese real estate giant also failed to clear payments last week.

This caused risk -sensitive currencies, the Aussie dollar and kiwi to plunge to nearly a month -long low against the greenback. Meanwhile, the euro fell to its lowest level since the end of July 2020.