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Dollar Down, but Near Year High as Investors Await Fed’s Next Taper Move

By Gina Lee

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Dollar Down, but Near Year High as Investors Await Fed’s Next Taper Move
© Reuters.

By Gina Lee

Investing.com – The dollar was down on Wednesday morning in Asia but held near a one-year high amid rising speculation that the U.S. Federal Reserve will announce the beginning of asset tapering in November 2021, followed by potential interest rate hikes by the middle of 2022.

The that tracks the greenback against a basket of other currencies edged down 0.20% to 94.332 by 11:17 PM ET (3:17 AM GMT). It touched 94.563 for the first time since late September 2020 on Tuesday.

The pair edged down 0.13% to 113.45.

The pair inched down 0.07% to 0.7344 while the pair inched up 0.10% to 0.6940.

The pair inched up 0.02% to 6.4475. Chinese , including , and , is due later in the day while inflation data, including the and price indexes, will be released on Thursday.

The pair was up 0.23% to 1.3617.

Three Fed officials, including Vice Chairman Richard Clarida, said on Tuesday that the U.S. economy has healed enough to begin to scale back the U.S. central bank’s asset-purchase program. Money markets are now pricing about a 50-50 chance of a rate increase by July 2022.

Meanwhile, surging energy prices continue to fuel inflation concerns and increased bets that the Fed could normalize its monetary policy much sooner than planned, sending two-year Treasury yields to their highest levels in more than 18 months during the previous session.

Investors now await the , due later in the day, for clues to the Fed’s interest rate hike timeline.

“CPI is the main economic draw” and “has the potential to see Fed rate hike expectations move again, one way or another,” National Australia Bank (OTC:) head of foreign exchange strategy Ray Attrill told Reuters.

With most Fed policymakers insisting that inflationary pressures are transitory, investors now await comments from Fed Governors Lael Brainard and Michelle Bowman, among others, due to speak later in the day. The central bank will also release the minutes from its latest meeting.

In cryptocurrencies, bitcoin traded around $56,500, after reaching a five-month high of $57,855.79 at the beginning of the week.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Forex

Dollar Edges Lower; Sterling in Focus ahead of U.K. Budget

By Peter Nurse

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Dollar Edges Lower; Sterling in Focus ahead of U.K. Budget

By Peter Nurse

Investing.com – The dollar edged lower in early European trade Wednesday in calm trading ahead of next week’s Federal Reserve meeting, while the U.K. budget places sterling in focus.

At 2:30 AM ET (0630 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 93.892.

traded 0.1% lower at 114.03, edged 0.1% higher at 1.1603, while slipped marginally to 1.3763 ahead of Britain’s annual budget.

The Federal Reserve has now gone into a blackout period ahead of next week’s policy-setting meeting, and ahead of this traders are focusing on the release of a series of important data releases.

Wednesday’s sees the release of the September , but the 3Q release on Thursday and the September deflator on Friday will attract the most attention.

Elsewhere, rose 0.2% to 0.7513 after Australian core inflation rose at its fastest annual pace since 2015, prompting traders to price in earlier hikes in interest rates.

The headline consumer price index rose 0.8% in the third quarter and 3.0% for the year, much as expected, but the annual measure of core inflation accelerated to 2.1%, well above the 1.8% expected and putting it back in the RBA’s 2% to 3% target range for the first time in six years.

Sterling could be vulnerable Wednesday as U.K. Chancellor of the Exchequer Rishi Sunak delivers his annual budget. 

Much of the talk ahead of this set piece has been about Sunak loosening the purse strings, following leaks that he is set to end the public sector pay freeze, but the Chancellor still faces a tricky balancing act in this year’s budget. Too much largesse and he risks sparking more inflation with the Bank of England already looking at tightening monetary policy, but too little and he risks strangling an already hesitant recovery.

“The pre-budget leaks have typically involved new spending plans rather than how this is going to be paid for. That does perhaps leave GBP a little vulnerable tomorrow should the UK Chancellor announce any kind of fiscal consolidation,” said analysts at ING, in a note.

traded largely flat at 1.2391 ahead of the latest policy-setting meeting later this session. The central bank is expected to reduce its weekly government bond purchases again, marking the fourth time over the past 12 months the central bank has rolled back its program, paving the way for the start of interest rate increases next year.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Forex

Shanghai Starts Trial to Clear Hidden Debt as China Cuts Risks

(Bloomberg) — The city of Shanghai launched a trial to eliminate all so-called hidden government debt, becoming the second Chinese region to start a program to clean up off-balance sheet risk.

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Shanghai Starts Trial to Clear Hidden Debt as China Cuts Risks
© Bloomberg. A man stretches on the Bund as skyscrapers of the Pudong Lujiazui Financial District stand across the Huangpu River during sunrise in Shanghai, China, on Friday, March 20, 2020. Most of China is now considered low risk and should return to normal work and life, Premier Li Keqiang said at a government meeting on the coronavirus, which is spreading rapidly in Europe, the U.S. and elsewhere. Photographer: Qilai Shen/Bloomberg

(Bloomberg) — The city of Shanghai launched a trial to eliminate all so-called hidden government debt, becoming the second Chinese region to start a program to clean up off-balance sheet risk.

The trial was in response to the central government’s strategy to prevent and resolve financial risks related to local government hidden debt, the Shanghai city government said in a statement on its website Tuesday. It didn’t provide further details on the trial.

The announcement came two weeks after Guangdong province, the manufacturing powerhouse in southern China, announced a similar trial, suggesting local governments are getting more serious about tackling off-balance sheet debt. 

A major source of hidden debt is local government financing vehicles, or LGFVs, which are used to raise funds for infrastructure and other expenditure and carry an implicit guarantee of repayment. Goldman Sachs Group Inc (NYSE:). estimated that LGFV debt surged to 53 trillion yuan ($8.3 trillion) at the end of last year from 16 trillion yuan in 2013. That’s equal to about 52% of China’s gross domestic product and is larger than the amount of official outstanding government debt.

Beijing has tried to tackle hidden debt for several years already but gave it more importance this year after calling it a national security risk. It’s ordered officials to deal with it by paying down debt or bringing it onto the balance sheets of local authorities. 

Cities and provinces may have started to use some of the proceeds from the sale of refinancing bonds to repay hidden debt this year, an analysis by Bloomberg found.

©2021 Bloomberg L.P.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Forex

Australian Dollar Up as Prices Rise More Than Expected

By Alfred Romann

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Australian Dollar Up as Prices Rise More Than Expected
© Reuters.

By Alfred Romann

Investing.com – The US dollar retreated marginally in early morning trade in Asia while the gained some ground after prices rose more than expected.

The that tracks the greenback against a basket of other currencies was down 0.03% to 93.92 by 9:40 PM ET (01:40 AM GMT).

The pair was down 0.05% to 114.08. A weakening of the yen since the previous trading session after the country reported slower-than-expected producer price increases on Tuesday has pushed the Japanese currency past the JPY114 level against the dollar, a level that it touched last week for the first time since 2016.

The pair fell 0.04% to 6.3830.

The pair rose 0.34% to 0.7524 while the pair fell 0.17% to 0.7161.

In Australia, rose faster than expected over the last quarter, rising 2.1% in the third quarter, compared to an expected 1.8% rise. The increase puts the measure within the Reserve Bank of Australia’s (RBA) target of 2-3% for the first time in six years, according to the data from the Australian Bureau of Statistics. The increase sent the currency higher after the data was released late in the morning in Sydney.

Australia’s headline rose 3% in the third quarter of the year, slightly lower than the 3.1% widely expected, Bloomberg reported.

“The strong rise in underlying inflation will keep pressure on the RBA to keep reducing monetary stimulus in the months ahead,” Ben Udy, an economist at Capital Economics told Reuters.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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