US Dollar Takes A Break After Rally And Sits Just Above 16-month High | Naija News
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US Dollar Takes A Break After Rally And Sits Just Above 16-month High



The dollar hovered below a 16-month peak at the start of Asian trading on Thursday, after losing ground on the pound and yen overnight as the US currency took a break as traders wondered if its recent outbreak was starting to run out of steam.

The British pound was at $ 1.3491, a one-week high against the dollar jumping 0.5% on Wednesday after a jump in UK inflation in October prompted the Bank of England to raise its rate at its meeting next month.

Against the Japanese currency, at 114.18 yen, the dollar was still in sight of Wednesday’s 4.5-year high of 114.97, and the euro was at $ 1.1316, languishing near a low 16 months, markets seeing the eurozone near the back of the central bank rate hike queue.

Strong U.S. retail sales data earlier this week fueled the recent dollar rally, which began last week after a strong impression of U.S. inflation bolstered market bets that the Federal Reserve will have to increase rates by the middle of next year.

The dollar index, which measures the currency against a basket of six rivals, fell from 93.872 on November 9, the day before inflation data to 96.226 on Wednesday, its highest level since mid-July 2020. It was last at 95.798.

However, “the sustainability of the current dollar’s strength beyond the next few months seems far from certain,” said Luc Luyet, FX strategist, Pictet Wealth Management.

“Market expectations for the Fed are starting to be particularly hawkish, suggesting limited tailwinds for the US dollar from this factor.”

“In addition, the outlook for economic growth could become more favorable for the euro as the worst of China’s economic downturn seems largely behind us, as the costs of Covid and import d ‘energy might prove to be less of a problem last winter.”

Others, however, saw a falling dollar as a chance to buy.

“Dips have been hard to come by lately, but anything in the 95 lows looks like a buying opportunity,” Westpac analysts said in a note.

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