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Why is the dollar so strong now? Expectation of continued monetary tightening in the U.S.

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why is the dollar so strong now

Why is the dollar so strong now? The dollar is rising against other major world currencies Thursday morning as markets continue to assess the U.S. Federal Reserve’s (Fed) policy outlook, trading data showed.

The euro-dollar exchange rate is down to $0.9973 from the previous close of $0.9977, while the dollar-yen exchange rate is up to 143.36 yen from 143.15 yen. And the dollar index (the exchange rate against a basket of currencies from six U.S. trading partners) is up 0.04%, to 109.71 points.

Why is the dollar so strong now? 

The U.S. annual inflation data for August showed that consumer price growth slowed weaker than expected – to 8.3% from 8.5%, and this statistic strengthened expectations of a more “hawkish” Federal Reserve policy, which is positive for the dollar.

After the release of inflation data, some experts began to lay down an increase in the Fed’s discount rate by 1 percentage point at once. According to the CME Group, 30% of experts are laying odds on that, while the rest continue to expect an increase of 0.75 percentage points.

“Investors remain very cautious about the possibility of excessive monetary tightening in the U.S.,” Agence France-Presse quoted analysts at Okasan Online Securities as saying.

The next Fed meeting is scheduled for Sept. 20-21.

Earlier, we reported that gold prices remain stable today as the market awaits U.S. inflation data.

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The dollar is down again against major world currencies

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the dollar is down again

The dollar is down again against the euro, the pound, and the yen, according to trading data.

The euro rose to $0.9913 from the previous close of $0.9882, the pound to dollar rose to $1.1357 from $1.1326;, and the dollar to yen fell to 144.56 yen from 144.63 yen. The dollar index (the exchange rate against a basket of currencies from six U.S. trading partners) was up 0.77 percent, to 110.92 points.

Why is the value of the dollar going down?

Investors will look forward to macrostatistical data on the U.S. labor market on Thursday and Friday. Later in trading will be the nation’s initial jobless claims for the week through October 1. Experts predict the index will increase by 10 thousand up to 203 thousand compared to the previous week.

Friday will release important statistics on unemployment in the USA. Analysts believe the rate in September remained at the August level of 3.7%, while the number of those employed in non-farm industries increased by 250,000.

Unemployment data is an important indicator for the U.S. Federal Reserve (Fed) in making rate decisions. The regulator has repeatedly stated its willingness to fight high inflation, since the beginning of the year, the key rate has been raised five times; in November, the markets expect another increase. According to the CME Group, 66% of analysts are predicting another 75 basis point increase to 3.75-4%, while the remaining 34% are predicting a 50 basis point increase.

Earlier we talked about Copper and Zinc rising in price after new LME restrictions; and Aluminum exceeding $2,400 a ton.

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Forex

Base metals prices today rising after new LME restrictions, aluminum exceeds $2,400 a ton

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base metals prices today

Base metals prices are rising today. Copper and zinc prices rose sharply after the London Metal Exchange announced on Thursday new restrictions on shipments from UMMC facilities. Aluminum prices have climbed by 2.5% to above $2,400 per ton for the first time since August 30, according to market data.

Base metals market

December futures on copper on the Comex exchange rose 0.95% to $3.5767 a pound (about 0.45 kilograms) at 10.20 am, while the maximum price was $3.5922. Zinc futures rose 3.7% to $3,156.5 per ton, compared with a daily high of $3,192.5.

Aluminum futures were up 1.68% to $2,391.5 per ton by this time and were already up to $2,419. Aluminum has been rising in price since late last week after reports surfaced that the LME is considering possible bans on new shipments of Russian metal to its warehouses.

At the end of Wednesday’s trading on the LME, the price per ton of copper with delivery in three months was down 0.5% to $7,679.5. Aluminum was up 0.17% to $2,352 and zinc was down 0.1% to $3,044.

Earlier we talked about gold prices surpassing $1,700 an ounce.

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Forex

Current gold prices combined above $1,700 an ounce

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current gold prices

Current gold prices rose on Tuesday morning; the price was above $1,700 dollars per troy ounce, according to trading data.

The price of December gold futures on the New York Comex Exchange rose by $6.85, or 0.4%, to $1,708.85 per troy ounce. December silver futures rose 1.53% to $20,905 per ounce.

Daily gold prices were supported by a decline in yields on U.S. government bonds. Thus, the yield on ten-year government bonds (U.S. Treasuries) fell to 3.615% from the previous close of 3.651%, while at the beginning of Monday’s trading the indicator exceeded 3.8%.

U.S. Treasuries are an alternative investment to gold, which is why their quotes tend to move in different directions. As a result, gold gained 2.3% on Monday, from $1,670 to $1,710.

Earlier, we reported that oil rises in anticipation of possible OPEC+ production cuts.

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