Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Dollar Down, Investors Monitor Inflation and Fed Monetary Tightening

ForexJan 21, 2022 03:54
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Gina Lee

Investing.com – The dollar was down on Friday morning in Asia. Fears that inflation will remain high and that the U.S. Federal Reserve will tighten its monetary policy soured investor sentiment, driving gains for the safe-haven Japanese yen vis-a-vis the riskier Australian dollar.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.06% to 95.665 by 10:41 PM ET (3:41 AM GMT).

The USD/JPY pair was down 0.37% to 113.66, a one-week low.

The AUD/USD pair was down 0.50% to 0.7189 and the NZD/USD pair was down 0.36% to 0.6730.

The USD/CNY pair inched up 0.03% to 6.3430. The GBP/USD pair inched down 0.01% to 1.3593, near its lowest level since Jan. 11.

The U.S. currency took a breather from its recent gains as a rally in U.S. Treasury yields cooled. However, it was still headed for its best week in two months.

The Australian dollar fell as much as 0.57% to 82.02 yen, its weakest level in a month, and as last down 0.32% to trade at $0.72035.

U.S. shares suffered a sharp selloff overnight in the final hours of trading, while Asian counterparts were down on Friday. U.S. Treasury yields retreated from multi-year highs. However, U.S. yields advanced, driven by market expectations that the Fed will tighten monetary policy faster than anticipated.

Fed funds futures have already fully priced in an interest rate hike in March 2022 and a total of four hikes within the year.

The Fed will convene for a two-day policy meeting to hand down its policy decision starting Tuesday. Investors will be on the lookout for clues to the Fed’s timeline for both interest rate hikes and asset tapering.

The greenback hit a more-than one-week high on Thursday and was up 0.65% for the week. It rebounded from the previous week's 0.61% slide.

Despite recent volatility, the dollar could rise further as the Fed tightens its monetary policy, according to some investors.

The currency "should continue to firm into next week's Fed meeting," Westpac said in a client note, adding they "wouldn't be surprised" if the dollar index tops its 2021 high at 96.938.

"Admittedly, a lot is priced in now," the note continued, "but a straight comparison of the dollar index versus yield spreads shows that the dollar has not fully priced in this story."

Dollar Down, Investors Monitor Inflation and Fed Monetary Tightening
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email