Dollar rebounds on Fed expectations, Aussie drops
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NEW YORK — The dollar clawed back from
earlier losses on Monday as a hawkish Federal Reserve official
laid out the case for further rate hikes, while the Australian
dollar sank on concerns about unrest over COVID restrictions in
China.
The greenback rebounded in early U.S. trading and added to
gains after St. Louis Fed President James Bullard said that the
U.S. central bank needs to raise interest rates quite a bit
further and then hold them there throughout next year and into
2024 to gain control of inflation and bring it back down toward
the Fed’s 2% goal.
Comments from Fed Chair Jerome Powell on Wednesday will be
watched for any new signals on further tightening with key U.S.
jobs data for November also due on Friday. The U.S. central bank
is expected to hike rates by an additional 50 basis points when
it meets on Dec. 13-14.
“The markets have hit a bit of a plateau about what they’re
expecting. They know that the Fed’s going to raise rates, and
that’s behind everything, but they’re not sure how much or
when,” said Joseph Trevisani, senior analyst at FXStreet.com.
The dollar index has fallen to 106.65 from a 20-year
high of 114.78 on Sept. 28 on expectations that its rally may
have been overstretched and as the Fed looks to slow its pace of
rate increases.
Some of the recent decline is also likely due to investors
and traders booking profits before year-end, said Trevisani,
noting that many trading firms curtail activity in December.
The dollar had dipped earlier on Monday despite other safe
haven currencies the Japanese yen and the Swiss franc gaining on
concerns about China.
Hundreds of demonstrators and police clashed in Shanghai on
Sunday night as protests over China’s stringent COVID
restrictions flared for a third day and spread to several cities
in the wake of a deadly fire in the country’s far west.
Shaun Osborne, chief FX strategist at Scotiabank in Toronto,
said that the earlier decline in the dollar despite worsening
risk appetite could reflect a shift in market sentiment towards
the U.S. currency, but noted that it’s too soon to be certain.
The greenback was last down 0.22% to 138.87 Japanese yen
. The euro dipped 0.60% to $1.0339.
The risk sensitive Aussie dollar, which is strongly
tied to Chinese growth, was the worst performing major currency,
falling 1.61% to $0.6648. The currency was also dented by data
showing that Australian retail sales suffered their first fall
of 2022 in October as rising prices and higher interest rates
finally seemed to have an impact on spending.
The offshore yuan weakened against the dollar to
7.2467.
Bitcoin fell after major cryptocurrency lender BlockFi filed
for Chapter 11 bankruptcy protection along with eight
affiliates, the latest crypto casualty to follow the spectacular
collapse of the FTX exchange earlier this month.
The cryptocurrency was last down 1.30% at
$16,211.
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Currency bid prices at 3:01PM (2001 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index 106.6500 106.3400 +0.30% 11.485% +106.6900 +105.3100
Euro/Dollar $1.0339 $1.0403 -0.60% -9.05% +$1.0497 +$1.0337
Dollar/Yen 138.8650 139.1650 -0.22% +20.62% +139.4350 +137.5000
Euro/Yen 143.59 144.75 -0.80% +10.18% +145.0000 +143.0600
Dollar/Swiss 0.9491 0.9480 +0.16% +4.10% +0.9495 +0.9407
Sterling/Dollar $1.1953 $1.2089 -1.10% -11.60% +$1.2118 +$1.1952
Dollar/Canadian 1.3491 1.3400 +0.69% +6.71% +1.3493 +1.3395
Aussie/Dollar $0.6648 $0.6756 -1.61% -8.56% +$0.6728 +$0.6646
Euro/Swiss 0.9812 0.9833 -0.21% -5.37% +0.9890 +0.9793
Euro/Sterling 0.8649 0.8598 +0.59% +2.96% +0.8675 +0.8587
NZ $0.6162 $0.6247 -1.38% -9.99% +$0.6244 +$0.6160
Dollar/Dollar
Dollar/Norway 10.0270 9.8765 +1.36% +13.64% +10.0270 +9.8835
Euro/Norway 10.3634 10.2549 +1.06% +3.50% +10.3856 +10.2623
Dollar/Sweden 10.5531 10.4112 +0.84% +17.02% +10.5571 +10.3700
Euro/Sweden 10.9075 10.8171 +0.84% +6.58% +10.9160 +10.8406
(Editing by Nick Zieminski and Chizu Nomiyama)
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