He US dollar advanced against most currencies and hit a new near two-month high against a basket of peer currencies, while the new zealand dollar (kiwi) plummeted this Wednesday after the country’s central bank cut interest rates by 50 basis points.
He dollar indexwhich measures the value of the greenback against a basket of currencies that includes the yen and euro, extended its rally to the highest level since Aug. 16 and rose 0.38% to 102.88. For its part, the kiwi fell 1.32% to $0.6057 and reached its lowest level since August 19.
He yen has suffered strong shocks since the new Japanese prime minister, Shigeru Ishibaknown to be a critic of loose monetary policy, surprised markets with recent comments that the country is not prepared for further rate hikes.
He euro extended its selling spree to a two-month low against the dollar and ultimately lost 0.36% to $1.094. Dollar/yen rose 0.72% to 149.26, surpassing Monday’s high and reaching its highest level since August 15.
In front of swiss francthe dollar strengthened 0.42% to 0.86, reaching its highest level since August 20. The pound sterling weakened 0.25% to $1.3071, hitting its lowest level since September 12. In turn, the Australian dollar fell 0.43% against the US dollar to $0.6716 and the yuan weakened to 7.0810 per dollar.
Eyes on the Fed
Investors will also be watching the release of the minutes of the September meeting of the Federal Reservewhich will be published later in the day and will show the debates about what at the time seemed like a deterioration in the labor market. The meeting ended with all those responsible for monetary policyexcept one, agreeing to a cut of 50 basis points.
That will be somewhat outdated, however, after last Friday’s strong nonfarm payrolls data caused markets to reprice expectations for rate cut of the Fed in the short term. Investors are now pricing in a roughly 85% chance of a quarter-basis-point cut, reflecting a small chance the Fed will leave rates unchanged, the CME FedWatch tool showed.
This represents a change from before the payrolls data, when a 25 basis point move was fully priced in and there was a one in three chance of a larger 50 basis point move.
The report of consumer price index September USA Thursday will be the main data this week, as investors will be watching to see if there are any signs that the stronger labor market is having an effect on the inflation.
At a time when markets are less certain about cuts in the Fed, Although easing elsewhere is still priced in, the dollar index touched 102.7, its highest level since August 16. It was last trading just below that figure, up 0.19% on the day.
Source: Ambito
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