Dollar Soars against European currencies as U.S expects, significant rise in interest rates
For the past seven weeks, the dollar was trading high against most of the European currencies. On monetary policymakers, it’s a clear indication that the USA Central Bank is planning to increase the interest rates far along this month.
Lael Brainard, the Federal Reserve Governor, said in the late Wednesday that the refining international economy and the recent US recovery proves that the next rise in interest rates will be “suitable soon.”
The US dollar, which is a standard benchmark of most of the currencies, its strength rose to the highest levels ever since 11th January. The hike is directly related to the US president’s outlined the vision for £800billion worth for tax cut and infrastructure development.
The markets expect that the Fed funds are likely to move up by more than 80% for the period ending March. President Trumps high flourishing spending has given a kick off to the creation and protection of shares.
The Chief Marketing Analyst at CMC Markets UK, Michael Hewson, is reported to have said that the rise of the dollar was after Mr. Trump’s speech. The markets drove a wave of anticipation that an improving global financial outlook and the boom spending will boost inflation which will again improve the returns by manufacturing and construction companies while the higher rates will increase financials.
The Dow Jones Industrial Average stock index smashed through the 21,000 record for the first time on Wednesday. It was after Mr. Trump adopted a more cautious tone in his first address to a joint gathering of Congress, convincing some investors who had been disturbed by his bold tone and divisive plans, especially regarding foreign investors.
Oil prices decreased for a 3rd consecutive day following a record build-up in U.S. crude catalogs and data designating Russian oil product was stable last month, warning a pause in Moscow's attempts to restrict production following the deal struck with the OPEC producers' club. Brent crude LCOc1 dropped 79 cents to $55.57 a barrel.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, Copenhagen, revealed to Reuters Global Oil Forum that he still sees a risk of $50 a barrel before $60 on Brent and he acknowledged that the company had experienced a limited selling based on appetite.
The metal prices weighed on the firmer dollar showed a little change due to the growing demand. The result proved that the Chinese factory activities increased faster than expected for the period ending February. According to the purchasing manager data, Copper CMCU3, which is an essential Chinese import fell by 0.8% to $964 a ton while the price of Gold XAU dropped by 0.7 percent to $1,239 an ounce.
The indices of the dollar, DXY which measures the greenback versus baskets of six majority currencies hit a seven-week higher to a 0.3 percent. The Euro dropped 0.3% to $1.0514, the Yen fell 0.6 % to 114.40 a dollar, and Sterling GBP=D4 was level at $1.2286, although it touched a six-week lower at $1.2257. According to the data, the US Treasury yields also pushed higher in the fixed income markets. This serves as a clear indication that the will be an increase in the interest rates within this month.