Meanwhile, the British pound fell 1% to $1.1839 on the day and headed for its biggest weekly drop against the dollar since September 2020. as concerns intensify over Britain’s economic slowdown.
While the euro, down 0.4% at $1.0053, was headed down 2% since last Friday, marking its worst week since July 8.
“The US dollar is back on the front line this morning supported by another round of aggressive speeches from the Fed (…) the general tone of the officials suggests that the Fed still has a lot of work to do to contain inflationsaid Jane Foley, head of foreign exchange strategy at Rabobank in London.
St. Louis Fed President James Bullard, his San Francisco Fed colleague Mary Daly and Kansas City Fed President Esther George said it would be reasonable to keep raising rates to fight inflation.
Notably the weakness of this week’s Chinese data and the energy crisis in Europe raise fears of a further economic slowdown, which has also weighed on European currencies and supported safe-haven flows, Foley added. “We expect another break below parity,” she said.
However, despite the chorus from the Fed about the need to raise rates, the probability of another 75 basis point rate hike next month has shrunk to 45% in money markets.
The chairman of the Fed, Jerome Powellwill update the market on his views at the annual Jackson Hole symposium August 25-27.
Source: Ambito
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