Dollar up on US rate outlook

The better-than-expected reading on US payrolls had investors betting the Federal Reserve will stick to its plan to raise borrowing costs twice more this year — including once next month — having lifted rates in December and March.

The likelihood of further tightening has seen the dollar rally more than four percent since hitting a recent low around 108.30 yen in mid-April.

Analysts say it could push further following the release of sales and consumer price index figures this week.

“While we think the Fed will be resolute on its course towards at least two rate hikes, the market is underpricing the risk that (the central bank) will tighten rates more quickly than expected, so a robust retail sales print and a stronger-than-expected CPI print will be a call to action for dollar bulls,” said Stephen Innes, senior trader at OANDA, in a note.

The greenback was also up against the euro — which has run out of steam since pressing higher leading up to the French election — and most other high-yielding currencies, including the Australian dollar, South Korean won, Indonesian rupiah and Mexican peso.

AFP

 

This article 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 Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Senior Currency Trader and Analyst at OANDA
Stephen has over 25 years of experience in the financial markets and specializes in Asian currencies at OANDA. After having started his trading career with NatWest Bank, he is currently based in Singapore as a Senior Currency Trader and Analyst with OANDA, focusing on the movement of the Aussie Dollar and ASEAN Currencies. Stephen has an extensive trading experience in Interest Rate Futures, Money Markets and Precious Metals. Prior to joining OANDA, he worked with organizations like Cambridge Mercantile, Nat West, Garvin Guy Butler, Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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