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Dollar Down, Concerns About Hawkish Central Bank Monetary Policy Grow

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Dollar Down, Concerns About Hawkish Central Bank Monetary Policy Grow
© Reuters.

By Gina Lee

Investing.com – The dollar was down on Thursday morning in Asia, remaining below a 16-month peak. The U.S. currency , prompting investors to ask whether the rally is slowing down.

The that tracks the greenback against a basket of other currencies inched down 0.08% to 95.748 by 22:40 PM ET (3:40 AM GMT). It climbed as high as 96.226 on Wednesday, its highest since mid-July 2020.

The pair inched down 0.02% to 114.05.

The pair inched down 0.02% to 0.7268 and the pair was up 0.33% to 0.7020.

The pair inched up 0.02% to 6.3787 and the pair inched up 0.10% to 1.3494. U.K. inflation jumped in October, with the consumer price index growing 1.1% and 4.2% . The higher-than-expected levels is putting pressure on the Bank of England to hike interest rates in December.

The euro was at $1.1316, remaining near a 16-month low as the European Central Bank is widely perceived to be in the back of the line in hiking interest rates.

Better-than-expected U.S. retail sales data earlier in the week gave the dollar’s recent rally a boost. U.S. inflation, which hit a record 30-year high in October, also raised bets that the U.S. Federal Reserve will hike rates around the middle of 2022.

However, “the sustainability of the current dollar strength beyond the next few months looks far from certain,” Pictet Wealth Management FX strategist Luc Luyet told Reuters.

“Market expectations of the Fed are starting to be particularly hawkish, suggesting limited tailwinds for the dollar going forward from that factor. Furthermore, the economic growth outlook may turn more supportive of the euro as the worst of the slowdown of China’s economic activity looks mostly behind us, whereas COVID-19 and energy import costs may prove less of an issue than the past winter,” Luyet added.

Other investors viewed the dollar’s dip as an opportunity to buy. “Dips have been hard to come by lately, but anything into the low-95s looks like a buying opportunity,” Westpac analysts said in a note.

Meanwhile, commodity currencies fell thanks to oil prices that fell to six-week lows. The Canadian dollar was at 1.2608 against its U.S. counterpart, near a six-week low hit on Wednesday. The Bank of Canada is also expected to begin hiking interest rates in early 2022.

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Forex

Eurozone annual inflation rate slowed to 10% in November

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eurozone inflation rate

Eurozone inflation rate rose 10% now. Inflation has slowed down from 10.6% in October, when the rate was at its highest since the start of calculations. Analysts polled by Trading Economics had expected inflation to slow to 10.4 percent.

Eurostat Eurozone inflation – current data

Consumer prices declined by 0.1% compared to the previous month. Consumer prices excluding volatile factors such as energy, food and alcohol (CPI Core Index tracked by the ECB) rose 5% year-on-year in October after rising the same amount in October.

Energy prices slowed to 34.9% in November after rising 41.5% in October. Manufactured goods prices rose 6.1%, the same as a month earlier. The U.S. is about the same, putting pressure on stock markets and even Apple stock prices today.

The cost of food, alcohol and tobacco products rose 13.6% after an increase of 13.1% in October. Services rose 4.2% (+4.3% a month earlier).

The highest inflation in annual terms was recorded in Latvia (21.7%), Estonia, and Lithuania (21.4%). The lowest price growth was observed in Spain (6.6%), France (7.1%) and Malta (7.2%).

Earlier we reported that the dollar is getting cheaper against major currencies.

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Forex

Dollar is getting weaker against major currencies

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the dollar is going to crash

The dollar is getting weaker against major currencies in trading Thursday morning after U.S. Federal Reserve (Fed) Chairman Jerome Powell spoke the day before.

During a speech at the Brookings Institution on Wednesday, Powell reiterated that the Fed could slow the rise in the benchmark rate as early as December. “The time to moderate the pace of rate hikes may come as early as the next meeting,” Powell said.

The Fed chair, meanwhile, tried to balance those words with “hawkish” signals. Market Watch notes. He said that the U.S. Central Bank will have to raise the rate higher than could be expected a few months ago. Also, Powell made it clear that the issue of rate cuts is irrelevant at the moment. Against this background, the stock market and Tesla stock prices today in particular rose.

Another Fed official, Board of Governors member Lisa Cook, is confident that the regulator needs to keep raising the rate because inflation is still too high. “We’ve started to get more favorable inflation data. But I would be cautious about drawing big conclusions on just one month’s worth of data,” Cook said during a speech at the Detroit Economic Club.

Is the dollar going to crash? It’s premature to make such statements. So far, the euro has gained 0.36% against the dollar to $1.0443 against $1.0406 at the close of the session on Wednesday. The dollar/yen exchange rate declined 1.14% to 136.50 yen from 138.07 yen at the end of the previous session. The pound gained 0.31% to $1.2095against $1.2058 the day before.

The ICE-calculated index showing the dynamics of the US dollar against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona) is down 0.4%, while the broader WSJ Dollar Index is losing 0.6%.

Earlier we reported that unemployment in the Eurozone fell to 6.5% in October and in the EU to 6.0%.

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The unemployment rate in the eurozone decreased to 6.5% in October, to 6.0% in the EU

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eurozone unemployment

The unemployment rate in the Eurozone was 6.5%. The index has fallen to a record low level in the history of its calculations. In September 2022, the unemployment rate was 6.6%. Analysts had expected the unemployment rate to remain at the September level of 6.6%, according to Trading Economics.

Eurozone unemployment fell to 6.0% from 6.1% a month earlier. There were 12.953 million unemployed in the 27 EU countries in October, of which 10.872 million were in the eurozone. Compared to October 2021, the number of unemployed fell by 1.158 million in the EU and 1.053 million in the euro area.

In October, there were 2.872 million unemployed young people (under 25 years of age) in the EU, of which 2.326 million were in the euro area. The youth unemployment rate in the EU and the euro area was 15.1% compared to 15.2% (EU) and 15% compared to 15.2% a month earlier (euro area). In the U.S., the situation is similar, which puts pressure on stock markets and in particular on NVIDIA stock prices today

Among EU countries the lowest unemployment rate in October was registered in Czech Republic (2.1%), Poland and Germany (3.0%), Malta (3.1%) and the highest in Greece (11.6%) and Spain (12.5%).

In France, unemployment remained at 7.1% and in Italy dropped to 7.8% from 7.9% in September.

Earlier, we reported that the Chinese stock market closed in the negative amid protests in China.

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