U.S. Dollar Higher On Fed Rate Hike Bets
September 01 2022 - 5:30AM
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The U.S. dollar advanced against its most major counterparts in
the European session on Thursday, on growing hopes of aggressive
rate hikes by the Federal Reserve to control inflation.
Cleveland Federal Reserve President Loretta Mester said that the
fed funds rate will be required to rise above 4 percent by early
next year.
Mester added that she does not anticipate the Fed cutting
interest rates in 2023 and that rates would remain elevated "for
some time."
The non-farm payrolls data, due on Friday, is expected to show a
further improvement in the labor market.
The CME Group's FedWatch is suggesting a 72.5 percent chance of
a 75 basis point rate hike this month.
Data from the Labor Department unexpectedly showed a modest
decrease in first-time claims for U.S. unemployment benefits in the
week ended August 27.
The report showed initial jobless claims edged down to 232,000,
a decrease of 5,000 from the previous week's revised level of
237,000.
The dip came as a surprise to economists, who had expected
jobless claims to inch up to 248,000 from the 243,000 originally
reported for the previous week.
The greenback rose to 1.0001 against the euro, off an early low
of 1.0054. If the greenback rises further, 0.96 is likely seen as
its next resistance level.
The greenback firmed to 1.1552 against the pound, a level unseen
since March 2020. The next possible upside target for the currency
is seen around the 1.14 level.
Against the loonie, the greenback jumped to a 1-1/2-month high
of 1.3194. The greenback is likely to challenge resistance around
the 1.33 level.
The USD/CHF pair was trading higher at 0.9794. The greenback had
touched a 1-1/2-month high of 0.9809 against the franc in the
previous session. Next key resistance for the currency is seen
around the 1.00 level.
In contrast, the greenback retreated to 139.06 against the yen,
0.6846 against the aussie and 0.6117 against the kiwi, after rising
to a 24-year high of 139.68, 1-1/2-month highs of 0.6792 and
0.6075, respectively in the Asian session. The greenback is seen
finding support around 120.5 against the yen, 0.70 against the
aussie and 0.63 against the kiwi.
U.S. ISM manufacturing PMI for August and construction spending
for July are set for release in the New York session.
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