FOREX-US dollar sails higher as markets assess sharp Fed rate hike
By Gertrude Chavez-Dreyfuss
NEW YORK, September 19 (Reuters) – The dollar rose up against major currencies on Monday, trading within tight limits scales, front from a series of central bank meetings this week led by the Federal Reserve, which is expected to raise interest rates an additional 75 basis points (bps).
The volume was light overall, with the London and Tokyo markets are closed on public holidays.
Global stock markets remained on edge, however, and the dollar maintained its firm tone, given expectations that the Fed would maintain its aggressive stance contraction path until next year contain stubbornly high inflation.
Fed funds futures were priced in an 81% chance of getting 75 basis points rate hike this week and a 19% probability of a 100-increase following two-day U.S. central bank policy meeting, Refinitiv data shows FEDWATCH
The dollar index =USDwhich measures the currency against six counterparties, increased by 0.1% at 109.62, not far from the 20-year high of 110.79 reached on September 7.
SSince the start of the year, the dollar index has jumped 14.7%, on track for its best annual percentage gain in 18 years.
“Generally, the trend is your friend until the toe bend. The dollar is going to follow that pretty well,” said Amo Sahota, executive director of FX advisory firm Klarity FX in San Francisco.
“Will there be more dollar strength ahead of the FOMC (Federal Open Market Committee)? I think the market will pull a bit here. It will go into a waiting pattern and some consolidation,” he said. -he adds.
This week is also littered with holidays that could reduce liquidity and lead to bigger price moves, with Japan and Britain off Monday, Australia on Thursday and Japan back on Friday, among others.
In other currenciesthe euro waslittle changed against the dollar at $1.0021EUR=EBSpound sterling slipped 0.1% to $1.1424GBP=D3 and in view of Friday’s 37-year low $1.13510, while New Zealand fell 00.6% to $0.5958 USD=D3.
Earlier in the session, the New Zealand unity fell to its lowest since May 2020 of US$0.5933
The Canadian dollar fell to its lowest in nearly two years toh CA$1,3354 per US dollar CAD=D3. The US dollar last changed hands at $1.3258, unchanged on the day.
Against the yen, the dollar rose 0.2% to $143.18JPY=EBShovering below a strong resistance level at 145 which was bolstered by tougher talk from Japanese policymakers on monetary intervention.
The Bank of Japan is expected to stick with massive stimulus at its Wednesday-Thursday meeting, keeping its ultra-loose policy in place. But a turning point in Japanese monetary policy could come sooner than previously thought, with the central bank recently dropping the word “temporary” from its description of high inflation.
The Chinese yuan ended at a new 26-month low on Monday and traded below the psychologically critical 7 to the dollar level. CNY=CFXS. In offshore trading, the yuan was 0.35 weaker CNH=D3.
Bitcoin BTC=BTSP, the largest cryptocurrency by market value, fell to a three-month low below $19,000 as unease over rising interest rates globally hit risky assets . It was the last down 00.2% to $19,381.
Ether, the cryptocurrency used in the Ethereum blockchain, rallied from a two-month low against the dollar and was the last 10.4% higher at $1,358.60ETH=BTSP.
Ethereum underwent a major software update last week that changes the way ether tokens are created, significantly reducing its power consumption.
Currency prices at 3:19 p.m. (7:19 p.m. GMT)
Closing of the previous session
Percentage change since the beginning of the year
New Zealand Dollar/Dollar
Global exchange rateshttps://tmsnrt.rs/2RBWI5E
Dollar holds steady as markets brace for another aggressive Fed rate hikehttps://tmsnrt.rs/3xv7gKH
(Reporting by Gertrude Chavez-Dreyfuss in New York; Additional reporting by Dhara Ranasinghe in London and Kevin Buckland in Tokyo; Editing by Bradley Perrett, Frank Jack Daniel, Paul Simao and Marguerita Choy)
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