{"id":140419,"date":"2021-10-01T13:33:47","date_gmt":"2021-10-01T13:33:47","guid":{"rendered":"https:\/\/precoinnews.com\/?p=140419"},"modified":"2021-10-01T13:33:47","modified_gmt":"2021-10-01T13:33:47","slug":"dollar-set-for-best-week-since-june-on-expected-fed-tightening","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/dollar-set-for-best-week-since-june-on-expected-fed-tightening\/","title":{"rendered":"Dollar set for best week since June on expected Fed tightening"},"content":{"rendered":"

LONDON (Reuters) – The dollar began the last quarter of 2021 near its highest levels of the year, and was headed for its best week since June as investors expected a hawkish-sounding Federal Reserve to lift U.S. interest rates sooner than its major peers.<\/p>

FILE PHOTO: U.S. dollar bills are seen on a light table at the Bureau of Engraving and Printing in Washington, November 14, 2014. REUTERS\/Gary Cameron\/File Photo\/File Photo<\/figcaption>

Cautious market sentiment due to COVID-19 concerns, wobbles in China\u2019s growth and a Washington gridlock ahead of a looming deadline to lift the U.S. government\u2019s borrowing limit also lent support to the dollar which is seen as a safe-haven asset.<\/p>\n

Refinitiv\u2019s measure of the dollar index dipped to 94.166, having gained 1.1% so far this week, the largest weekly rise since late June.<\/p>\n

Dollar index set for best week since June<\/p>\n

\u201cLast week\u2019s Fed meeting added fresh life into the debate about a potential hike in the fed funds rate in 2022,\u201d said Jane Foley, head of FX strategy at Rabobank.<\/p>\n

\u201cThis is positive for the USD on two fronts. Firstly the USD looks better on a straightforward interest rate differential perspective. Secondly a hike in U.S. rates and a stronger USD will weigh on the growth outlook in EM.\u201d<\/p>\n

The growth outlook for emerging markets is already suffering on concerns of a slowdown in China and on fears of an energy crunch, Foley said.<\/p>\n

\u201cThe result is that the USD benefits from a drop in risk appetite and flows out of higher risk EM markets.\u201d<\/p>\n

The euro was 0.1% higher on Friday at $1.1588, but has fallen about 1.3% during the week, and through major support around $1.16, to touch its lowest levels since July 2020.<\/p>\n

The yen bounced from a 19-month low overnight but has lost 0.6% for the week and twice as much in a fortnight as a rise in U.S. Treasury yields has drawn flows from Japan into dollars. It last traded at 111.21 per dollar.<\/p>\n

Benchmark 10-year Treasury yields are up for a sixth straight week and real 10-year yields <\/span>US10YTIP=RR<\/span>, discounted for inflation, are rising far more quickly than counterparts in Europe. <\/span><\/p>\n

Commodity currencies made a bounce on the dollar on Thursday following a Bloomberg report that China had ordered energy companies to secure supplies for the winter at all costs, but were back under pressure on Friday. The offshore yuan hit a two-week high of 6.4420.<\/p>\n

Beijing is scrambling to deliver more coal to utilities to restore supply amid a power crunch that has unsettled markets due to the likely hit to economic growth.<\/p>\n

\u201cThe reasons to suspect an energy supply crunch in China are more deeply rooted and largely boil down to China\u2019s new policy aimed at reducing greenhouse emissions, which have put increasing curbs on domestic coal output,\u201d said Francesco Pesole, G10 FX strategist at ING.<\/p>\n

\u201cAt the same time, a historic import route \u2013 the one with Australia \u2013 has recently come under pressure amid geopolitical and trade tensions between the two countries, which recently saw China impose duties on Australian coal.\u201d<\/p>\n

One way this is affecting the FX market is through the notion that the Chinese central bank is now welcoming a stronger yuan in an attempt to insulate the country against soaring commodity prices, Pesole said.<\/p>\n

\u201cIt appears that markets have increasingly sunk their teeth into this narrative, and CNY\u2019s resilience to the Evergrande saga looks like a testament to this.\u201d<\/p>\n

The Australian dollar gained 0.3% to $0.7242 and slumped 3.6% in the third quarter – the worst performance of any G10 currency against the dollar – as prices for Australia\u2019s top export, iron ore, fell sharply. The New Zealand dollar gained 0.2% to $0.6911.<\/p>\n

Central banks in both countries meet next week, with the Reserve Bank of New Zealand seen hiking while the Reserve Bank of Australia is expected to stick with its forecast to keep rates where they are until 2024.<\/p>\n

Sterling was also an underperformer last quarter, dropping 2.5%, and looks set to log its worst week in more than a month, weighed down by worries about a hawkish sounding central bank in spite of growing supply chain problems.<\/p>\n

Sterling gained 0.3% to trade just above a 9-month low at $1.3516.<\/p>\n

Markets in Hong Kong and China were closed on Friday. Traders are awaiting U.S. personal spending and core consumption deflator data later in the day and nervously watching for any progress on the debate over raising the U.S. debt ceiling.<\/p>\n

A deadline for authorising extra Treasury borrowing looms in mid-October.<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

LONDON (Reuters) – The dollar began the<\/p>\n","protected":false},"author":3,"featured_media":140418,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23051],"tags":[],"yoast_head":"\nDollar set for best week since June on expected Fed tightening - Pre Coin News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/precoinnews.com\/business\/dollar-set-for-best-week-since-june-on-expected-fed-tightening\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Dollar set for best week since June on expected Fed tightening - Pre Coin News\" \/>\n<meta property=\"og:description\" content=\"LONDON (Reuters) – The dollar began the\" \/>\n<meta property=\"og:url\" content=\"https:\/\/precoinnews.com\/business\/dollar-set-for-best-week-since-june-on-expected-fed-tightening\/\" \/>\n<meta property=\"og:site_name\" content=\"Pre Coin News\" \/>\n<meta property=\"article:published_time\" content=\"2021-10-01T13:33:47+00:00\" \/>\n<meta name=\"author\" content=\"mediabest\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/precoinnews.com\/wp-content\/uploads\/2021\/10\/Dollar-set-for-best-week-since-June-on-expected-Fed-tightening.jpg\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"mediabest\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/precoinnews.com\/business\/dollar-set-for-best-week-since-june-on-expected-fed-tightening\/\",\"url\":\"https:\/\/precoinnews.com\/business\/dollar-set-for-best-week-since-june-on-expected-fed-tightening\/\",\"name\":\"Dollar set for best week since June on expected Fed tightening - 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