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Weekly Roundup: US dollar strengthens amid speculation of a 100bps rate hike

currency-newsWeekly Roundup: US dollar strengthens amid speculation of a 100bps rate hike
The US dollar initially stumbled last week as demand for the safe-haven currency was knocked by an upbeat market mood.

However, this was swiftly reversed with the publication of the latest US consumer price index. A smaller-than-expected drop in headline inflation, coupled with a strong uptick in underlying inflation carried the US dollar sharply higher as it turbocharged Federal Reserve interest rate hike bets.

The CPI figures cemented expectations for a 75bps rate hike from the Fed this week, while also prompting some more bullish investors to price in a possible 100bps hike.

A stronger-than-expected US retail sales print, and subdued market mood helped the US dollar to consolidate these gains in the second half of the week.

Turning to this week, the Fed’s impending interest rate decision will be centre stage. Expect to see USD exchange rates skyrocket in the middle of the week if the Fed opts for a 100bps increase.

However, later in the week we may see the latest US S&P PMIs pile some pressure on the US dollar if they report another sizable contraction in US service sector growth this 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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