The dollar rose to its highest level since early February against a basket of currencies on Friday, boosted by higher expectations of a Federal Reserve interest rate hike this year and a weakening euro. Hawkish comments from Fed officials including New York Fed President William Dudley and higher expectations that Hillary Clinton will win the US presidential election have increased bets that the US central bank will raise rates in December.
Dudley said on Wednesday the Fed will likely increase interest rates later this year if the US economy remains on track. "There have been some Fed comments where they sound like they are ready to move in December, but also partly related is the market view that a hike in December is much more likely if Clinton wins than if Trump wins," said Steven Englander, global head of foreign exchange strategy at Citigroup in New York.
A victory by Donald Trump is seen as more likely to create uncertainty and possible market volatility, which could delay an interest rate increase. Traders are now pricing in a 74 percent chance that the Fed will raise rates at its December meeting, up from 64 percent two weeks ago, according to CME Group's FedWatch Tool. The dollar index rose as high as 98.754, the highest since February 3. The euro fell as low as $1.0870, the lowest since March 10. Weakness in the euro following Thursday's European Central Bank meeting boosted the greenback.
Comments
Comments are closed.