US Dollar Hits 10-Month High as Concerns over Interest Rates Rise

The US dollar remained stable on Wednesday, hovering near a 10-month high amid concerns about higher US interest rates. In contrast, the euro and sterling dipped to their lowest levels in six months. By 03:20 ET (07:20 GMT), the Dollar Index, which measures the greenback against a basket of six other currencies, was up 0.1% at 105.967, after reaching as high as 106.30 earlier.

Federal Reserve (Fed) officials’ stance aligned with the conclusions of the recent meeting, where they hinted at the likelihood of further rate hikes after delaying the tightening cycle last week. Consequently, US bond yields have fallen while markets adjust their portfolios to account for a prolonged period of tight financial conditions. The yield on the 10-year Treasury note reached 4.5255% and briefly touched a 16-year high of 4.5660% during the session—levels last seen in November last year.

In other news, Germany’s GfK Confidence Index is predicted to decline in October, with the GfK Institute forecasting a drop from -25.6 in September to -26.5 next month. Analyst Rolf Buerkl of GfK expects the chances of a consumer confidence recovery to dwindle to zero by the year-end. The euro slipped 0.1% to 1.0562, surpassing its earlier six-month low of 1.0555. Meanwhile, the pound is heading for a quarterly loss of over 4%, and the euro has recorded its worst quarterly performance in a year, with a loss of over 3%.

As for the yen, it climbed slightly to 149.06, approaching its weakest level in over 11 months, after the release of the Bank of Japan’s July meeting minutes. The minutes revealed policymakers’ consensus on the necessity of maintaining an accommodative monetary policy. Due to its sensitivity to long-term US government bond yield fluctuations, the pair is likely to breach 150 in the near term, which might attract intervention from Japanese authorities.

Down under, the Australian dollar inched down 0.2% to 0.6381, despite indications of accelerated inflation last month. Additionally, the yuan dipped 0.1% to 7.3045, despite robust data on China’s surging industrial profits in August.

Lastly, the value of the Thai baht continues to weaken, surpassing 36.5 baht against the US dollar, despite the Monetary Policy Committee’s decision to raise interest rates by another 0.25%, marking the eighth successive increase.

© Reuters. – The US dollar held steady on Wednesday near a new 10-month high on worries about higher US interest rates, while the euro and sterling fell to six-month lows.

By 03:20 ET (07:20 GMT), the Dollar Index, which tracks the greenback against a group of six other currencies, was trading 0.1% higher at 105.967, having previously climbed to 106.30.

Kashkari suggests a further increase in the feeding rate

The stance of the Fed officials was in line with the results of the recent meeting of the Federal Reserve, where they indicated the possibility that the central bank will have to raise rates again after delaying its rate raising cycle last week.

That has led to a drop in US bond yields. It has soared in recent days. This is because traders are adjusting their portfolios in line with financial conditions which will remain tight for longer than originally thought.

The yield on the 10-year Treasury note was at 4.5255% after hitting a 16-year high of 4.5660% earlier in the session, climbing to levels last seen last November.

Germany’s GfK Confidence Index Trends Down in October

It was also down 0.1% to 1.0562, trading above the 6-month low of 1.0555 seen earlier in the session.

German consumer confidence is set to fall in October, with the GfK Institute falling to -26.5 in October from a slightly revised -25.6 in September.

“Which thinks the chance of a recovery in consumer confidence is likely to drop to zero before the end of the year,” said GfK analyst Rolf Buerkl.

It fell 0.1% to 1.2153 after hitting a six-month low of 1.2136 earlier on Wednesday.

The euro is coming off a loss of more than 3% for the quarter, its worst quarterly performance in a year. Meanwhile, the pound is aiming for a quarterly loss of more than 4%.

The Yen is close to intervention levels.

Elsewhere, it edged higher to 149.06, near the Yen’s weakest level in more than 11 months, after the Bank of Japan’s July meeting minutes were released on Wednesday. This shows that policy makers agree on the need to continue to maintain an accommodative monetary policy.

The pair tends to be sensitive to changes in long-term US government bond yields, meaning a break above 150 is likely in the short term. This may attract interference from the Japanese authorities.

It fell 0.2% to 0.6381 even as data pointed to Australian inflation accelerating last month, while it eased 0.1% to 7.3045, with the yuan supported by good data on rapidly rising Chinese industrial profits in August

The value of the baht continues to weaken Floated up to more than 36.5 baht despite the MPC raising interest rates.

Today, the MPC passed a unanimous decision. Interest rates increased another 0.25% to reach 2.50%, marking the 8th consecutive increase. As for the baht value, it was not shaken. The next flow was 36.56 baht per US dollar.

#Dollar #hits #highest #level #November #Baht #continues #flow #MPC #decision #raise #rates