Dollar dips as risk sentiment improves, bitcoin hits record high

Euro, Hong Kong greenback, U.S. greenback, Japanese yen, pound and Chinese language 100 yuan banknotes are seen on this image illustration, January 21, 2016. REUTERS/Jason Lee/Illustration/File Picture

  • <a href=””>Graphic: World FX charges</a>

NEW YORK, Oct 20 (Reuters) – The greenback dipped on Wednesday as threat sentiment improved and as buyers targeted on rising commodity costs and when world central banks are prone to start mountaineering rates of interest to fend off persistently excessive inflation.

The dollar hit a one-year excessive in opposition to a basket of different currencies final week as market members ramped up bets that the Federal Reserve will increase charges earlier than anticipated to quell rising worth pressures.

These bets have pale, nonetheless, whereas buyers are pricing for much more aggressive charge will increase in different international locations and as commodity-linked currencies together with the Canadian and Australian {dollars} outperform.

“In relation to central banks, there’s numerous aggressive pricing on the market,” stated Bipan Rai, North American head of FX technique at CIBC Capital Markets in Toronto, noting that the market is probably going overstating how briskly charge hikes will come.

The greenback index was final down 0.09% at 93.71.

Rai expects the greenback might outperform if buyers pare again charge hike expectations in different international locations, although “that’s one thing that’s going to take a while to right.”

“When push involves shove, given the underlying fundamentals in america, that are nonetheless very constructive for progress, we predict the Fed might be going to be the central financial institution that raises charges over the course of the approaching years at a little bit of a extra aggressive clip than the market is pricing in now,” Rai stated.

Market members are pricing for the Fed to lift charges twice by the top of 2022.

ING FX strategists stated in a consumer observe the greenback’s latest decline might be on account of a mixture of markets closing long-dollar positions and “a benign threat setting, the place a powerful U.S. earnings season has continued to offset inflation/financial tightening considerations.”

“At this stage, it appears to be like just like the greenback is missing some catalysts to comprise the continuing correction, and any help to the dollar may have to come back from a cool-off within the latest risk-on temper in markets,” ING stated.

The Australian greenback, seen as a liquid proxy for threat urge for food, gained 0.27% on the day to $0.7496, having hit its highest since July in a single day.

The New Zealand greenback rose 0.41% to $0.7154, the very best since June.

Decreased demand for safe-haven property noticed the greenback hit a four-year excessive of 114.67 versus the yen in a single day, earlier than retracing to 114.26.

The Canadian greenback was greater on the day after the nation’s annual inflation charge accelerated to an 18-year excessive in September, placing the deal with the Financial institution of Canada forward of a charge determination subsequent week. read more

The dollar was final down 0.07% in opposition to the loonie at CAD$1.2352.

The British pound was down 0.05% at $1.3781 after information confirmed that British inflation slowed unexpectedly final month. The figures did little to alter expectations that the Financial institution of England will change into the world’s first main central financial institution to lift charges. read more

In cryptocurrencies, bitcoin hit a report excessive of $66,074, a day after the primary U.S. bitcoin futures-based exchange-traded fund started buying and selling. read more


Foreign money bid costs at 9:46 AM (1346 GMT)

Reporting by Karen Brettell; Extra reporting by Elizabeth Howcroft in London; Modifying by Steve Orlofsky

Our Requirements: The Thomson Reuters Trust Principles.

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