Dollar dips in choppy trading as risk appetite improves
The dollar was slightly lower on Thursday in choppy trading, having erased most of its early session losses, as investors bet the Federal Reserve would begin tapering its asset purchases next month and attention turned to the timing of interest rate hikes.
The greenback had rallied since early September on expectations the U.S. central bank would tighten monetary policy more quickly than previously expected amid an improving economy and surging inflation.
But the dollar reversed course on Wednesday, even after the minutes of the Fed’s Sept. 21-22 policy meeting confirmed the tapering of stimulus is likely to start this year and data showed that pricing pressures were still hitting U.S. consumers.
The market is expecting that the Fed will begin tapering its asset purchases as early as next month, and that the wind-down of the massive bond-buying program will happen fairly quickly, Osborne added.
At 3:25 p.m. EDT, the dollar index was down 0.036% at 93.982, having climbed back from a 10-day low of 93.754 earlier in the session. On Tuesday, the greenback hit a one-year high of 94.563 .
The euro was flat against the dollar, at $1.15955, falling from a nine-day high reached overnight, while the British pound was up 0.15% against the dollar, at $1.36815.
A return in risk appetite may also have dented demand for the safe-haven greenback, with U.S. equity markets notching solid gains on upbeat earnings, said Vassili Serebriakov, FX and macro strategist at UBS.
Elsewhere, the cryptocurrency bitcoin was up 0.13% at $57,451. It hit a five-month high of $58,550 earlier in the session.
BoE hike expectations push sterling to two-week high
Sterling hit a two-week high on Thursday, adding to the previous session’s gains, as traders focused on hopes that a post-Brexit trade war with the European Union will be avoided and on expectations the Bank of England will raise rates this year.
The pound was also helped by the dollar’s weakness as upbeat sentiment lifted stock markets and risk-oriented currencies such as sterling.
At 1456 GMT sterling was up 0.16% versus the dollar after having earlier reached a high of $1.3734, its highest level since Sept. 24.
Russia's rouble climbs to highest since July 2020, stocks hit record
The Russian rouble firmed against the dollar on Thursday to levels last seen in late July 2020, while a recovery in oil prices helped the benchmark MOEX stock index hit a record high.
At 1304 GMT, the rouble was 0.6% stronger against the dollar at 71.54, having hit its strongest level since July 27, 2020 at 71.5150.
Reference: Reuters
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