Fri. Jan 28th, 2022

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Dollar jump: markets

On Thursday, the dollar rebounded from a one-week low after a regional Federal Reserve chairman proposed that the U.S. central bank reduce asset purchases more quickly, bringing the greenback closer to a critical level of resistance.

The dollar index measures the green dollar against a basket of six major currencies. This week it rose nearly 0.06 percent immediately ahead of statements by James Bullard, the Fed’s president of St. Louis. Louis and a political hawk.

Bullard told CNBC he was pessimistic that inflation would fall and that the Fed should start reducing its bond-buying program as a result. We need to start reducing the volume and complete it by the end of the first quarter of next year. Then we can assess inflation and the situation, ”Bullard added.

At 15:58 ET, the dollar index had risen above 93, a significant resistance level, and was trading 0.24 percent at 93.05. For the first time since Aug. 17, the index fell Wednesday to 92,801.

The euro was trading at $ 1.1753, down 0.14%.

According to Steven Ricchiuto, senior American economist at Mizuho Securities USA LLC, the dollar index rose more than 93 two weeks ago and has since been challenging that level as a support level. Bullard’s comments will likely be discounted by the market. This is due, in part, to his being a non-voting member of the Fed’s policy-making committee. I don’t think we will invest (the upward trend of the dollar) very soon, he said.

Powell looked into his eyes

Bullard’s statements come as the annual Federal Reserve symposium kicked off in Jackson Hole, Wyoming, with Friday’s conference by Fed Chairman Jerome Powell, which would be the centerpiece. Analysts believe Powell would provide few signals about when the Fed may begin stopping its massive asset purchases.

The yen gained 0.04 percent to $ 110.03.

In the run-up to Powell’s speech, foreign exchange market volatility has declined, with implied volatility in euro dollars in as little as a week. Markets are measuring how the Fed will react to indications that inflation may be more transient than previously indicated, as well as whether it will maintain its new policy framework to allow inflation to subside.

Last Friday, the dollar index hit a 93,734-month high in 9-1 / 2 months, due to signs of volume decline that would begin this year.

Yields on eurozone bonds remain constant

Eurozone bond rates remained slightly lower on Friday. Traders waited for data on US inflation and Fed Chairman Jerome Powell’s address at the Jackson Hole symposium for any indication as to when the US central bank could begin to stimulate stimulus. .

Bonds were poised for the second calm session after recording their worst daily performance in six months on Wednesday, when 10-year benchmark rates rose from 6-10 basis points to a one-month high.

On Friday at 7.15 GMT, Germany’s ten-year yield, the eurozone benchmark, remained steady at -0.41 per cent, just below a Thursday high for the month. of -0.401 percent.

Italy’s ten-year yield fell one basis point to 0.66 percent, keeping the long-observed distance from ten-year German yields at 106 basis points, below this week’s 109 basis points, the largest in more than a month.

The basic personal consumption expenditure figure for July, which will reach 1230 GMT, is expected to show a year-on-year increase of 0.3 per cent.

 

The post What caused the bounce of the dollar? first appeared on FinanceBrokerage.

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