The greenback posted its first weekly gain in three weeks on the prospect of new clues the Feds might have to tighten monetary policy in some way due to rising inflation. Added to this, was also a plunging euro which restored some bounce to the world’s safe-haven currency
At the time of filing this report, the U.S dollar index, used in gauging the greenback’s strength against six major currencies including the Japanese yen, British pound sterling, Swedish Krona, and the Euro, settled for the week at 90.54 index points, posting gains of about 0.51%.
What this means
Individuals hoping to meet foreign exchange payment obligations via dollar transactions to countries like Europe and Japan would need to pay fewer dollars in fulfilling such payment obligations.
With about two trading sessions left to the all-important Federal Reserve’s two-day meeting set to commence on Tuesday and Wednesday, amid surging U.S inflation in play, currency traders are currently anticipating that the narrative on tapering might take its course. These macros further boosted the buying pressures for the greenback.
In contrast, the yellow metal posted a significant amount of losses at the end of Friday’s trading sessions, breaking below $1,890 per ounce with the strength in the greenback dulling investment demand for gold.
Although expectations still remain that the United States apex bank might stick to its previous narrative, recent gains seen in the U.S Jobs report and a red-hot inflation rate might increase the risk of the U.S Federal reserve becoming less dovish.
Additionally, the crypto market also suffered immense selling pressure with the rising value in the U.S dollar stalling Bitcoin’s decent recovery in the past few days. This, coupled with increased regulatory fears, pushed the pioneer crypto-asset around the $35,000 price levels.
That being said, bullish attempts, in breaking above the 90.60 price band will be challenging based on the stalled bullish momentum in the U.S Treasury yields, suggesting that the recent rebound might be temporary except the U.S Federal Reserve becomes a bit hawkish in the near term.
