Fed sounds eagle tune, DXY breaks 111 mark after 20 years | Anue Juheng-Forex

The US Federal Reserve (Fed) raised interest rates by another 3 yards as expected on Wednesday (21st), and indicated that it may continue to raise interest rates sharply.

The ICE US Dollar Index (DXY), which tracks the greenback against six major currencies, was up 1.03 percent at 111.35 in late New York trading, the highest since June 2002.

The dollar’s gains were limited as the Fed’s decision to raise interest rates was in line with market expectations, but analysts believe the trend will continue to support the greenback for some time, given that higher rates will last longer.

The Fed’s latest forecast shows that policy rates will rise to 4.4% by the end of the year and peak at 4.6% next year in an effort to curb rising inflation, with no rate cuts expected to begin until 2024.

Fed Chairman Jerome Powell admitted in a press conference after the meeting that although he hoped for a painless way to stop inflation, there was no such way, reiterating that he would continue to take aggressive measures, warning that the central bank’s actions could lead to the US economy Growth slowed and unemployment pushed up.

“We expect the dollar to remain strong in the near term, but would be complacent to discount downside risks for now, as the dollar is significantly overvalued,” said Shaun Osborne, chief currency strategist at Scotiabank. 100 percent so far this year, 16%, the biggest annual increase since Refinitiv records began in at least 1972.

Osborne also said the federal funds rate has risen more than 100 basis points since August, and he believes the dollar has priced in higher rate expectations.

Russian President Vladimir Putin announced a partial military mobilization order earlier on Wednesday, warning that he would not rule out all practical means if Western countries took action against Russian territory, which was interpreted as the possible use of nuclear weapons.

Putin’s comments heightened market concerns about the eurozone’s economic outlook, coupled with the pressure of a strong dollar, the euro fell 1.3% to $0.9840, falling to a 20-year low.

The pound also fell nearly 1% to $1.1274, another 37-year low; the Australian dollar fell 0.87% to $0.6629.

Compared to other major currencies, the yen’s depreciation against the dollar was not severe, falling 0.23% to 144.06 yen. Although the intraday low reached 144.70, it did not break below the 24-year low set at the beginning of this month.

From Thursday (22nd) Taiwan time around 6:00 Price:

  • The dollar index was 111.3606. +1.0522%
  • The euro/dollar exchange rate (EUR/USD) was quoted at $0.9838 per euro. -1.3042%
  • The British pound was quoted against the dollar (GBP/USD) at $1.1272 per pound. -0.9316%
  • The exchange rate of the Australian dollar against the US dollar (AUD/USD) was quoted at 1 Australian dollar to 0.6630 yuan. -0.8524%
  • The US dollar against the Canadian dollar (USD/CAD) was trading at 1.3458 Canadian dollars. +0.7034%
  • The US dollar was quoted against the Japanese yen (USD/JPY) at 144.04 yen per dollar. +0.2227%

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