Connect with us

Hi, what are you looking for?

Forex

Dollar Up, Investors Continue to Feel Bite of Hawkish Fed Decision By Investing.com

Dollar Up, China’s Services Sector Grows at Slower Pace in May


© Reuters.

By Gina Lee

Investing.com – The dollar was up on Friday morning in Asia and is set for its best week in nearly nine months. Investors also continue to after the U.S. Federal Reserve’s hint of a sooner-than-expected asset tapering.

The that tracks the greenback against a basket of other currencies inched up 0.02% to 91.888 by 1 AM ET (5 AM GMT).

The pair inched up 0.01% to 110.22. The maintained its interest rate stable at -0.10%, as widely expected, when it handed down its own policy decision earlier in the day.

The pair edged down 0.19% to 0.7536 and the pair inched down 0.10% to 0.6991.

The pair inched down 0.01% to 6.4472 and the pair inched down 0.08% to 1.3908.

Investors continue to digest the implications of the Fd hinting at asset tempering and interest rate hikes earlier than expected in its handed down earlier in the week.

“The Fed sent a very crucial message, that the days of plentiful, abundant, unlimited liquidity are drawing to a close,” Westpac head of FX strategy Richard Franulovich told Reuters.

“We can now see an end point to zero rates… and they’ve told us in very plain-speaking English that they’ve commenced the conversation on how to commence tapering. That signal has precipitated a dramatic position unwind, because dollar shorts were based on that unending liquidity tap from the Fed, and zero rates,” he added.

The greenback soared above its 200-day moving average to hit a more than two-month high of 92.010 since the Fed decision. It is set for a 1.5% weekly gain, the largest since September 2020.

“The viciousness with which the dollar has bounced back, the impulsive nature of it, tells me that there’s been a decisive shift for a lot of big, stale positions… this is a meaningful, decisive re-thinking in dollar prospects, just by the nature of the price action in the last couple of days,” said Franulovich.

Fed forecasts, also known as ‘dot plots’, showed that 13 of the 18-member policy board predicted interest rate hikes in 2023, compared with the previous six. Despite the plots being an inaccurate rates predictor, the sudden deviation caused shock waves throughout the market.

Investors also retreated from U.S. Treasuries, particularly five and 10-year tenors. However, the U.S. yield curve flattened during the previous session as some investors remained hopeful that the Fed’s more hawkish stance could avert hyperinflation.

“For us, the key takeaway… is the market’s preconceived idea of a fixed timeline for tapering is the wrong way to think about it,” RBC Capital Markets FX strategy global head Elsa Lignos told Reuters.

“Perhaps collectively we talked ourselves into the idea that the Fed is so keen to avoid a taper tantrum, that ‘they’ll be forced to follow the ‘market consensus’. The decision shows that is wrong… every meeting is now live for a taper discussion,” she added.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Click to comment

Leave a Reply

Your email address will not be published.

You May Also Like

Technology

Cybercriminals Adopt the Blockchain to Broadcast confidential Messages A group of analysts from SophosLabs represents that programmers working the crypto-jacking malware, Glupteba, have been...

Technology

PUBG unban in India soon as PUBG Corp. Will The Government Of India Unban PUBG? PUBG Mobile was Ban in India, PUBG organization has...

Technology

A standard method to execute Bitcoin could be powerless against double-spending, the new examination has found. Blockchain sleuths at ZenGo, a wallet startup, have...

BlockChain News

HDD mining, also known as “storage mining”, is a process of obtaining cryptocurrency based on hard disk memory. Compared with traditional POW mining, hard...