The US dollar giant continued higher gains in the European session, driven by the Federal Reserve’s (Fed) hawkish statement in its latest FOMC meeting minutes report.
Fed policymakers suggest that a strengthening in the labor market and high inflation may prompt them to raise interest rates earlier and reduce quantitative easing.
As a result, futures at federal funds rates (financial contracts that represent market opinion) have been expecting around an 80% chance of a rate hike in March.
At the opening of the European session, the dollar index, which measures the strength of the greenback dollar, traded strong at 96.30 against a basket of major currencies.
This also spurred the surge in US 10 -year bond yields to an 8 -month high above 1.70%, and the 30 -year yield was the highest since October 2021.
Meanwhile, the strengthening of the greenback dollar caused commodity -related currencies to continue to suffer which saw the Aussie dollar and kiwi trading fall to two -week lows.
The pound sterling was also dragged lower with price movements seen struggling to maintain its position above the 1.3500 price level against the US dollar. Euro trading, meanwhile, remained gloomy at a one -week low.
While awaiting the NFP employment report, investors will focus on the ISM services PMI data in advance which will be published in tonight’s New York session.
