By Peter Nurse
Investing.com – The dollar rises this Monday, reaching last week’s highs, while the euro suffers from growing anxiety about the impact of the rise in Covid-19 infections in Europe.
At 8:55 a.m. (CET), the, which tracks the currency’s performance against a basket of six other major currencies, rose 0.1% to 96.153, just below the 16-month highs for the month. last week, 96,266.
The pair points a rise of 0.2% to the level of 114.22, the drop to 1.3448, and the, very risk-sensitive, rises 0.3% to 0.7253.
The dollar received a boost on Friday after statements by Federal Reserve officials Richard Clarida and Christopher Waller pointed to the possibility of accelerating the pace of reduction of stimulus in a context of strong recovery and rising inflation.
The forex market has become obsessed with the Federal Reserve’s agenda for withdrawing its bond purchases, as a shorter withdrawal increases the possibility of interest rate hikes sooner. Currently, the market expects the US central bank to start raising rates in the middle of next year.
“We are finding increasing evidence of a new stretch of inflationary pressures in the United States which increases our conviction that the Fed will adopt a more aggressive stance during 2022,” Nordea (ST 🙂 analysts say in a note.
The Fed is to release its November meeting on Wednesday, in which policymakers decided the US economy was strong enough to begin cutting back its pandemic-era asset purchase program.
A large amount of data will be released that same day, including the core PCE price index, which is the Federal Reserve’s favorite inflation gauge, while much attention will be paid to whether the White House decides to keep the current Reserve Chairman. Federal, Jerome Powell, in his position another term or ascends to the current governor of the Federal Reserve, Lael Brainard.
Elsewhere, the pair fell 0.2% to the 1.1265 level, registering new 16-month lows, after Austria became the first Western European country to reimpose a full national lockdown to combat the Covid-19 virus.
Europe has once again become the epicenter of the pandemic, and Germany, the largest European economy, does not rule out the possibility of another period of lockdown, they said on Friday; in Belgium and the Netherlands, riots have erupted over the re-imposition of more restrictions.
The pair fell 0.3%, to the level of 11.1960, the lira tries to recover after living on Thursday one of its worst days in three years, after the central bank cut interest rates again despite the rising inflation.