NEW YORK: The dollar was slightly lower in choppy trading on Thursday, erasing most of its early session losses as investors bet the Federal Reserve will begin reducing its asset purchases next month and focus on raising interest rates. Will do Will go on time
The greenback had corrected since early September on hopes of a faster-than-expected tightening amid a recovery in the economy and rising inflation in the US central bank and monetary policy.
But the dollar reversed on Wednesday, minutes after the Fed’s September 21-22 policy meeting confirmed that a tapering of stimulus is likely to begin this year and data showed that pricing pressure was still on the US. affecting consumers. was killing
“I think what we’ve seen in the last day or two is a little bit of profit taking,” said Sean Osborne, chief forex strategist at Scotia Capital.
“I don’t think it is close to a significant reversal in the dollar trend at the moment, and in fact, I think what we saw today could be a sign of the corrective rally that we have seen in the past or two. The days have probably run their course,” he said.
Osborne said the market is expecting the Fed to begin reducing its asset purchases as early as next month, and that the massive bond-buying program will conclude fairly quickly.
“It seems to be somewhat moving in terms of when and how quickly the Fed is going to raise interest rates, so that’s another potential positive for the dollar,” he said.
At 3:25 a.m. EDT, the dollar index was down 0.036% at 93.982, having climbed back from a 10-day low of 93.754 in the previous session. On Tuesday, the greenback reached a one-year high of 94.563.
The euro was flat against the dollar at $1.15955, falling overnight from a nine-day high, while the British pound was up 0.15% against the dollar at $1.36815.
A return to risk appetite could dampen demand for the safe-haven greenback, with US equity markets posting solid gains on upbeat earnings, said Vasily Serebryakov, FX and macro strategist at UBS.
Thursday’s data showed the number of Americans filing new claims for unemployment benefits fell sharply last week to the lowest level since mid-March 2020.
In another report, the Labor Department said its producer price index for final demand increased, but on a monthly and year-on-year basis, the increase was lower than economists expected by Reuters.
The Australian dollar, which is seen as a liquid proxy for risk appetite, rose 0.47% to $0.7414 against the dollar, its highest level since September 7.
The New Zealand dollar also gained 0.93% to $0.7030, its highest mark in 2-1/2 weeks.
Elsewhere, cryptocurrency bitcoin was up 0.13% at $57,451. It had hit a five-month high of $58,550 in the previous session.
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