Rate bets rule the forex markets as the dollar shines; euro, Australian sag

An illustrative photo of US dollar, Swiss franc, sterling and euro banknotes taken in Warsaw on January 26, 2011. REUTERS / Kacper Pempel

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TOKYO, Nov. 17 (Reuters) – The US dollar hit a new high since March 2017 against the yen and traded near a 16-month high against a basket of major peers on Wednesday, as a series of data Strong economics boosted bets for the Federal Reserve’s earlier interest rate hike.

The Australian dollar weakened after wage data failed to strengthen the case for tighter monetary policy.

The greenback reached 114.975 yen before changing hands for the last time at 114.755.

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The dollar index – which measures the currency against six rivals, including the yen – was trading at 95.871, not far from the overnight high of 95.978, a level not seen since July of last year.

Retail sales in the United States rose more than expected in October, according to a report released Tuesday, building on last week’s momentum when data showed consumer prices rose at the fastest pace since 1990. read more

St. Louis Fed Chairman James Bullard said on Tuesday the central bank should “move in a more hawkish direction” during its next two meetings to prepare in case inflation does not start to slow down. Read more

Money markets are currently anticipating a high probability of a Fed rate hike in June, followed by another in November.

“The US economy appears to have gotten rid of the soft Delta zone and regaining momentum, despite persistent supply chain problems and the reopening of the bottleneck,” Westpac strategists wrote in a customer note, recommending to buy the dollar index if it falls. 95 level.

“Bullard’s obscene comments – voter next year – will leave markets comfortable prices during Fed hikes in 2022, in stark contrast to Europe where new virus suppression measures are being implemented. “

The euro was languishing near a 16-month low against the dollar as Europe suffered from concerns about growth amid a further rise in COVID-19 cases.

Germany’s parliament is due to vote on tougher measures to deal with the outbreak on Thursday, while Austria imposed a lockdown on unvaccinated people earlier this week. France, the Netherlands and many countries in Eastern Europe are also struggling to contain infections. Read more

European Central Bank President Christine Lagarde will speak later Wednesday, after saying on Monday that tightening monetary policy now to curb inflation could stifle the eurozone’s recovery. Read more

Isabel Schnabel, member of the ECB’s board of directors, also speaks at a separate event.

A euro last bought $ 1.13245, mostly flat since Tuesday, when it fell to $ 1.1309 for the first time since July 2020.

By contrast, the pound was firm after data was released on Tuesday showing UK employers hired more people in October after the government’s job protection leave program ended. Read more

Traders will analyze consumer price data later Wednesday for further support for Bank of England tightening.

The British pound was little changed at $ 1.34335 after hitting $ 1.3472 overnight.

It strengthened slightly to 0.8429 per euro, returning to its highest level this month at 0.84265, reached on Tuesday.

The Aussie fell 0.24% to $ 0.7287 after the release of data on wage growth, as economists expected on Wednesday, doing nothing to sway an accommodating Australian Reserve Bank.

RBA Governor Philip Lowe pushed back market prices for a rate hike next year on Tuesday, saying recent data and forecasts did not support such a move. Read more

In cryptocurrencies, bitcoin traded just north of $ 60,000, after dropping below that level on Tuesday for the first time this month. It hit a record high of $ 69,000 on Wednesday of last week.

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Reporting by Kevin Buckland Editing by Shri Navaratnam

Our Standards: Thomson Reuters Trust Principles.

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