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Weekly roundup: Dollar finds support as Fed comments boost rate hike hopes

currency-newsWeekly roundup: Dollar finds support as Fed comments boost rate hike hopes
Last week saw the US dollar put in its best performance so far in 2018, as investors flocked to the currency amid growing speculation that the Federal Reserve could implement up to four rate hikes this year.

USD shot higher last Monday as markets welcomed suggestions that the Fed may choose to speed up the pace of its monetary tightening in 2018.

This prompted a major sell-off on the stock markets, which in turn bolstered the US dollar as investors flocked to the safe haven currency amid fears of a possible crash.

Speculation intensified further following a number of speeches from Fed policymakers last week, many of whom appeared unfazed by the drop in stocks and appeared to support further rate hikes this year.

This led many investors to begin pricing in a March rate hike, with CME group’s FedWatch tool, currently placing the odds of a hike next month at over 75%.

Nevertheless, the US dollar may find itself beating a hasty retreat this week when the latest CPI figures are published.

Economists forecast that inflation will have slid from 2.1% to 1.9% in January, possibly weakening hopes of a Fed rate hike next month.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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