Investors are anticipating the January meeting of the US Federal Reserve, where there are high expectations that it will hold multiple rate increases.
Analysts were shocked by a sudden benchmark cut in China. Traders are assessing the global policy outlook and looking forward to Chinese economic information due Monday. This includes the Bank of Japan’s policy meeting results on Tuesday, inflation data for Britain on Wednesday, as well as Australian jobs data on Thursday.
The greenback traded 0.2% higher at 114.45yen in London’s trading session, which is 0.8% more than Friday’s low. The greenback also gained 100 basis points to $1.1403 against the euro.
These moves, which came in the wake of Friday’s dollar and U.S yield jumps, highlight support for the greenback from the hawkish rates outlooks. However, momentum for gains is starting to wane.
The U.S. dollar index was at 95.2-points in London on Monday. This is a sharp decline from Friday. After Friday’s move, the dollar strength’s interest-rate driver might not be entirely forgotten.
Experts in currency have noticed a rise in hawkish statements at Fed meetings since June last year. However, it might not necessarily lead to new dollar highs.
Although rates are unlikely to change at the Fed meeting Jan. 25-26 on the Federal Reserve, there is an increasing drumbeat of hawkish comments from both inside and outside the central bank.
Jamie Dimon, CEO of J.P. Morgan, said six to seven rate increases are possible this year. Bill Ackman, a billionaire manager of hedge funds, suggested that a 50 basis point increase could be possible on Twitter.
Both Treasury futures fell and Fed funds futures fell on Monday as the cash market was closed. This was due to a strong belief in at least four rate increases in 2022.