November 13, 2021

Where is the Currency Market Heading by the Weekend?

 The US dollar remained traded at a high on Friday and was on track to make the biggest weekly gain in five months since inflation continued to soar. The high surge in inflation has prompted investors to make expectations that the rate hike will take place as early as mid -2022.

U.S. Treasury Revenue traded rose to a February 2020 high. Investors had made expectations that U.S. policymakers would be forced to raise interest rates earlier than they had targeted.

The U.S. dollar index, which measures the U.S. dollar against major currencies, traded 0.1% to 95.27, the highest level since July 2020. At the same time, analysts predict the U.S. dollar will rise even more.

Strategist Mizuho, ​​expects the US dollar to remain strong in the first half of 2022 with interest rates starting to rise at that point. The increasingly significant strengthening of the US dollar has prompted traders to also take the opportunity to hedge against further strengthening of the US dollar.

On the other hand the Euro still traded lower to a 16 -month low of $ 1.1436, and sterling slipped to $ 1.3354, its weakest level this year. Traders also took a pessimistic stance when the European Central Bank showed indications not to change policy settings in the near term.

The risk -sensitive Australian dollar fell as low as $ 0.7277 for the first time in more than a month. The market continues to focus on the next central bank’s actions and statements.