U.S. Dollar Hits 3-Week High after GDP

The dollar touched a three-week high against its major counterparts as the U.S. economy expanded more than forecast in the third quarter to confirm the Federal Reserve’s decision yesterday to end its bond-buying program.

The yen declined after the Nikkei newspaper reported Japan’s Government Pension Investment Fund will raise its allocation of domestic stock to 25 percent and lower Japanese debt to 35 percent. The euro added to its biggest annual drop since 2005 before a report tomorrow that analysts said will show inflation remained below the European Central Bank’s target. Brazil’s real rallied after an unexpected rate increase, while Norway’s krone reached the lowest since 2009. The ruble soared.

“The real theme that’s driving markets is divergence — we received new information from the Fed yesterday and the dollar rally is back in play,” said Mark McCormick, a foreign-exchange strategist in New York at Credit Agricole SA. “For many years, the GPIF has had a conservative approach to investing,” and the reform will lead to outflows from Japan into overseas debt, McCormick said.

Bloomberg

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.