TOKYO- The dollar hovered near a one-year high versus major peers on Thursday, following a two-day surge amid expectations for a tapering of Federal Reserve stimulus from November and a possible interest rate hike in late 2022.
The safe-haven greenback also saw a bid on worries the Fed could start to tighten into a period of slowing global growth and persistently high inflation, and perversely did well amid an impasse in Washington over the US debt ceiling that threatens to plunge the government into a shutdown.
The dollar index – which measures the currency against a basket of six rivals – stood at 94.336, little changed from Wednesday, when it hit 94.435 for the first time since late September of last year.
The dollar bought 111.86 yen, easing slightly after reaching 112.05 overnight, a level not seen since February 2020.
The euro was little changed at $1.1602, holding near Wednesday’s 14-month low of $1.15895.
“King USD is in the house: it doesn’t matter the currency, just buy USDs has been the vibe,” Chris Weston, head of research at brokerage Pepperstone in Melbourne, wrote in a client note.
“We’re effectively seeing both the left and right side of the USD ‘smile’ theory working in earnest,” with “stagflation concerns” on the rise, while the Fed has “made it clear” it will taper from November and markets pricing rates lift-off for December 2022, Weston said. – Reuters
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