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© Reuters.
By Peter Nurse
Investing.com – The dollar gains positions at the beginning of the trading day in Europe this Monday, at the beginning of a week that includes a series of meetings of central banks, including the Federal Reserve, as concerns persist around the Omicron variant of Covid.
At 8:55 a.m. (CET), the, which tracks the evolution of this currency against a basket of six other major currencies, rose 0.2% to 96.243.
The pair rose 0.1% to 113.52, the pair fell 0.2% to 1.1286, and the, very risk-sensitive, fell 0.2% to 0.7154.
The pair fell 0.3% to the 1.3230 level after UK Prime Minister Boris Johnson warned on Sunday that the UK was facing an “avalanche” of the Covid virus Omicron variant. -19, while accelerating the reinforcement distribution program in the country to try to contain its damage.
He is one of the main central banks slated to hold meetings to set monetary policy this week, and these new concerns around the virus are expected to cause the central bank to be cautious, delaying its first rate hike since the pandemic until 2022.
Meetings of and of are also scheduled, but it is the Federal Reserve’s two-day meeting}}, which wraps up on Wednesday, that garners the most attention.
Everything indicates that the Fed will announce this week a faster reduction in asset purchases and, therefore, an earlier start of rate hikes, especially after President Jerome Powell’s recent aggressive speech to Congress and with prices consumption in the United States registering its biggest annual rise since 1982 on Friday.
“The Fed is about to signal that it needs to accelerate its tapering process, but the market price could still be more aggressive,” Nordea (ST 🙂 analysts say in a note. “The ECB will proceed more slowly. The Chinese authorities are also more concerned about the growth prospects.”
The market is already assuming a 25 basis point hike in US interest rates in May, and a move by the Federal Reserve to accelerate the end of its bond-buying program is likely to boost the dollar, especially against lower prices. currencies whose central banks are likely to be slower to adjust monetary policy.
On the other hand, the pair fell 0.1% to 6.3629, with the yuan approaching a three-year high, even as the Chinese authorities set their benchmark rates slightly lower than expected.
The People’s Bank of China has announced an increase in the mandatory foreign exchange reserve ratio by 200 basis points, from 7% to 9%, as of December 15.
The pair rose 3.2%, to the level of 14.3220, as the Turkish central bank failed to halt the weakening of the lira despite intervening at the end of last week in the currency market for the third time this month.
Rating agency S&P downgraded Turkey’s sovereign credit rating outlook to negative on Friday, citing the recent weakening of the lira and rising inflation.
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