Dollar Starts 2022 with Support as Inflation Test Looms
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The year has started well for the US dollar as the currency gains value across multiple regions. The primary reason behind the surge is stated by traders’ faith in the inflation data by Fed officials to bolster the interest rates.
After falling on Friday, the safe haven jumped 0.2% on the euro during the Asia session. It allowed the USD to climb up to its 200-day moving average, 1.1338 dollars. The currency also firmed 0.2% on the yen, taking it to 115.79. Early close to its five-year high of 116.35.
Find more here about the dollar’s movement. A holiday in Japan thinned the trade in Asia while Jerome Powell (Fed chair) and Lael Brainard (governor) testified in front of the Senate committee regarding their nominations as deputy chair and chair at the Federal Reserve.
Traders are set to witness the US inflation figures on Wednesday as the Consumer Price Index is rising 7% on a yearly basis. Qi Gao, Scotiabank FX’s strategist, talked about the recent development.
According to Qi, the USD index is more likely to regain some losses incurred on Friday. The reason behind the surge is the surging US inflation and Powell’s hawkish comments.
Qi added that the safe haven would most likely run out of gas, and the index will head toward 94 after money markets completely price in a Federal Reserve hike. Such events are likely to transpire in March. Currently, the USD index is trading 0.1% high at 95.912.
On the other hand, the crypto market is also picking pace, showing a positive outlook for the fiat currency market.
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