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Weekly Roundup: US dollar hits fresh 20-year high as Fed signals further tightening

currency-newsWeekly Roundup: US dollar hits fresh 20-year high as Fed signals further tightening
The US dollar was subdued at the start of last week’s trade amid thin trading conditions.

As the week continued, however, USD began to climb. US Treasury yields rose ahead of the Federal Reserve interest rate decision, with markets expecting hawkish action from the central bank.

Markets weren’t disappointed. The Fed raised rates by a further 75 basis points while signalling that more aggressive rate rises are on the way.

The ‘greenback’ suffered some profit-taking the day after the Fed decision, while shifting risk sentiment caused the safe-haven currency to waver.

However, market mood soured in earnest at the end of the week, pushing the dollar higher. Stronger-than-expected US PMI reports added to USD’s upside, with the dollar index rising to a fresh 20-year high.

Looking ahead, the US dollar will likely remain strong this week. An expected decline in durable goods orders may weigh on USD, but speeches from Fed officials could keep it afloat.

Friday brings the latest core PCE price index – the Fed’s preferred measure of inflation – which markets predict will show a modest rise in inflation. If the reading prints above or below forecasts, USD could jump or drop, respectively.
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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