The US dollar posts its biggest weekly gain in a month

The U.S. dollar index posted its biggest weekly percentage gain in a month on Friday, buoyed by the prospect of a more aggressive pace of tightening from the U.S. Federal Reserve to curb soaring inflation.

The index also hit 100 for the first time in nearly two years. It hit 100.19, its highest since May 2020. It was last little changed on the day at 99.822 and was up 1.3% on the week.

The greenback has gained ground against a six-currency basket over the past month, particularly against the euro, which has come under pressure from investor concerns over the economic costs of war in Ukraine and a potentially biting presidential election in France.

Photo: Reuters

Capital Economics’ senior markets economist Jonas Goltermann said “the Fed’s hawkish message on quantitative tightening, new sanctions risks in Europe and the poll shift in favor of far-right candidate Marine Le Pen ahead of the French presidential election put pressure on risk sentiment, especially in Europe.”

The release this week of minutes from last month’s Fed meeting showed that “many” attendees were ready to raise rates in 50 basis point increments over the next few months.

On the other side of the rally in the US dollar, the euro fell to a one-month low at US$1.0837. It closed down 0.04% at $1.0876. The euro has fallen in seven straight sessions.

Minutes of the European Central Bank’s meeting released on Thursday suggest its policymakers are keen to act to fight inflation, but the eurozone has so far taken a more cautious approach than other central banks, weakening the euro.

“The ECB minutes were in little contrast to recent comments from policymakers, although the sentiment is that the bank is simply awaiting data over the next few months showing the impact of rising energy prices and of the war in Ukraine to decide when to rise first – whether in Q3 or Q4,” wrote Shaun Osborne, chief currency strategist at Scotiabank in Toronto, in a research note.

“In either scenario, we don’t expect more than 50 basis points of ECB tightening this year, which is only what the Fed is expected to roll out in a single meeting next month,” he said. he declared.

A tight election race in France between French President Emmanuel Macron and far-right candidate Le Pen has increased pressure on the euro, raising concerns among investors over the future direction of the eurozone’s second-largest economy. . Macron is still ahead in the polls.

Meanwhile, the New Taiwan Dollar declined against the US Dollar on Friday, losing NT$0.078 to close at NT$28.906, down 0.7% from NT$28.705 the previous week. Turnover totaled $1.251 billion during the trading session.

The US dollar rose against the Japanese yen, hitting ¥124.67, its highest in more than a week and closing in on last month’s nearly seven-year high of 125.1. It closed up 0.27% at ¥124.3 and up 1.44% on the week.

The yen stabilized this month after falling last month, but remains under pressure as the United States raises interest rates and the Bank of Japan intervenes in the bond market to keep rates low.

The British pound lost ground against the US dollar, falling 0.31% to US$1.3034.

Additional CNA reports, with an editor

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