Por Peter Nurse
Investing.com – The US dollar gains positions at the start of trading in Europe on Thursday, attempting to recover from the previous day’s heavy losses as the Federal Reserve raised interest rates but also lowered rates. expectations of even higher future increases.
At 9:05 AM ET, the , which tracks the currency against a basket of six other majors, is up 0.2% at 102.828, after falling nearly 1% from the highs of two decades recorded after the Fed’s decision.
The pair is down 0.2% to 1.0598 after rising around 1% during Asian trading, while the pair is up 0.4% to 129.55 after hitting below the psychologically important level of 130 for the first time in a week.
On Wednesday a rise of 50 basis points, its largest increase since 2000, as expected.
But comments from Chairman Jerome Powell that Fed members were not actively considering 75 basis point moves in the future surprised many in the currency markets, as traders were confident the FOMC would go for a rate hike. even higher to try to combat inflation that is at a four-decade high.
However, the dollar tries to recover this Thursday, since more increases of 200 basis points are expected to materialize in the remainder of the year.
“Market pricing is not particularly aggressive relative to history. It does not look particularly aggressive given where the economy is currently,” ING (AS:) analysts explain in a note. “Although the Fed is not likely to admit it, we are convinced that it will carefully examine the impact on long-term inflation expectations following the FOMC decision.”
Furthermore, “the FOMC’s focus on fighting inflation and bringing forward rate hikes continues to indicate that the dollar will remain supported through the summer months.”
Attention now turns to the , as the UK central bank is expected to raise rates by 25 basis points on Thursday, marking its fourth rate-hike meeting in a row.
“The aggressive stance of the Bank of England has not stopped the fall of the pound, since the GBP/USD pair has fallen by 4.31% in the month of April. I do not expect the pound to breathe easy for long after a rise 0.25%, and the risk for the British currency remains tilted to the downside,” says OANDA analyst Kenneth Fisher.
The pair is down 0.6% to the 1.2542 level.
Elsewhere, the pair is down 0.6% to the 0.7222 level, reversing some of the earlier gains after the Reserve Bank of Australia hiked interest rates on Tuesday to combat inflation, while the rose 0.1% to 6.6171, on fears that strict COVID-19 lockdown measures will weigh on China’s efforts to boost economic growth.
Everything indicates that Poland and the Czech Republic will raise interest rates this Thursday to curb the acceleration of inflation, raising their key rates by one percentage point to 5.5%. In Prague, a rise of 50 basis points is expected, which would place the country’s reference interest rates at 5.5%.