News

Dollar edges higher

The dollar traded higher on Monday, testing last week’s highs, as the euro suffered from growing concern about the impact of rising Covid-19 infections in Europe.

The Dollar Index, which measures the value of the US currency against a basket of six other currencies, rose 0.1 percent to 96.153, just shy of last week’s 16-month high of 96.266.

The USD/JPY increased by 0.2 percent to 114.22, the GBP/USD decreased by 0.3 percent to 1.3448, and the risk-sensitive AUD/USD rose by 0.3 percent to 0.7253. The dollar gained ground on Friday after remarks by Federal Reserve officials Richard Clarida and Christopher Waller hinted at a faster pace of stimulus tapering in the face of a robust recovery and hot inflation.

The foreign exchange market has become fixated on the Fed’s timetable for phasing out its bond purchases, as a faster phase-out increases the likelihood of earlier interest rate increases. The market currently expects the Federal Reserve of the United States to begin raising interest rates by the middle of next year. On Wednesday, the Fed will release the minutes of its November meeting. Policymakers decided the US economy was strong enough to begin winding down its pandemic-era asset purchase program.

Much attention will pay to whether the White House keeps incumbent Fed Chair Jerome Powell in place for another term or promotes current Fed Governor Lael Brainard.

In other news, the EUR/USD fell 0.2 percent to 1.1265, a new 16-month low, as Austria became the first country in Western Europe to reimpose a complete national lockdown in response to the Covid-19 virus.

Europe has once again become the pandemic’s epicenter, with Germany, Europe’s largest economy, refusing to rule out another lockdown on Friday and riots breaking out in Belgium and the Netherlands in response to the imposition of additional restrictions.

USD/TRY fell 0.3 percent to 11.1960, as the lira attempted to recover from one of its worst days in three years on Thursday when the central bank cut interest rates again despite rising inflation.

Acting Chancellor Angela Merkel told conservative party leaders in Germany that the measures taken to combat the spread of the coronavirus in Europe’s largest economy were insufficient and that stronger action was required.

Meanwhile, Austria implemented its fourth lockdown, the first since vaccines became widely available, closing Christmas markets, bars, cafes, and theaters.

Support

Platform

Spread

Trading Instrument

Subscribe to our newsletter

Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. If you are interested in following the latest news on the topic, please follow Finance Brokerage on Google News.

What's your reaction?

Excited
0
Happy
0
In Love
0
Not Sure
0
Silly
0

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *

More in:News