Dollar makes big gains on inflation worries

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US dollar banknotes can be seen in this illustrative photo taken on February 12, 2018. REUTERS / Jose Luis Gonzalez / Illustration / File Photo

  • Dollar index up 0.3%
  • Bitcoin up 5% in almost 5 months

NEW YORK, Oct. 6 (Reuters) – The dollar rose to the yearlong high reached last week on Wednesday as soaring energy prices fueled concerns about inflation and rising interest rates. interest, reducing investor appetite for riskier assets and leading to flows to safe-haven securities.

Stocks fell and government bond yields rose globally on Wednesday as oil prices hit their highest level in seven years.

“What you are seeing this week are more inflationary fears seeping into the wider market,” said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, Calif.

Rising inflationary pressures could hamper growth and have implications for how quickly the Federal Reserve can raise interest rates.

The Federal Reserve has said it will likely start cutting its monthly bond purchases as early as November, and then follow them with interest rate hikes, as the US central bank turns away from pandemic crisis policies takes hold. ‘magnitude. Read more

“The question will be whether this forces the Fed to move faster than expected,” Trang said.

The US dollar currency index, which measures the greenback against a basket of six currencies, rose 0.3% to 94.3. The index hit a one-year high at 94.504 last week.

The weekend U.S. payroll report, which could provide clues to the U.S. Federal Reserve’s next move, remains a point of interest for investors.

Friday’s data on non-farm wages is expected to show continued improvement in the labor market, with a forecast to create 473,000 jobs in September, according to a Reuters poll.

“If we’re somewhere in the approximate stage… that supports the dollar trend we’ve seen,” Trang said.

Actual vs estimates, in thousands

U.S. private sector payrolls grew more than expected in September, as COVID-19 infections began to decline, allowing Americans to travel, eat out, and re-engage in other high-touch activities ADP’s national employment report showed Wednesday. Read more

Sterling / dollar implied volatility, an indicator of expected swings in currency options, hit a seven-month high around 7.9% on Wednesday, as surging energy prices and surging bond yields made lower the pound by 0.4% against the greenback.

Poland’s central bank on Wednesday raised its main interest rate to 0.5% from 0.1% on Wednesday, it said in a statement, raising borrowing costs earlier than analysts expected. ‘had planned to counter a spike in inflation. The move helped push the Polish zloty up by around 0.4%.

The strength of the greenback, combined with an aversion to riskier currencies, caused the New Zealand dollar to fall 0.7% despite the New Zealand central bank’s interest rate hike on Wednesday for the first time in seven years and signaling a further tightening to come. Read more

Meanwhile, Bitcoin, the world’s largest cryptocurrency by market value, jumped 5.09% to $ 54,124.02, its highest level since May.

Reporting by Saqib Iqbal Ahmed, editing by William Maclean

Our Standards: The Thomson Reuters Trust Principles.


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