US Dollar drowns as rate hike bet wanes

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US Dollar drowns as rate hike bet wanes

On Friday, the US Dollar Index (DXY) measured against a six major currency had edged lower as FX traders appeared to off-load US Dollar- ‘long buy’ positions from their portfolios following Fed Chair Powell’s remarks earlier in the day.

On top of that, the greenback also had been plunged by seasonal peevishness which is conventional in October, while a weekend profit-taking wave with American currency hitting a fresh one-year high last year, had added to further strain.

Nevertheless, earlier in the day, US Fed Chair Jerome Powell was quoted saying that the Federal Reserve had been prepared to resume tapering of its monthly $120 billion bond repurchase program, but it would be too early to raise interest rates given the scale of employment gains.

Powell’s remarks had spooked equity market participants and had led to a drag in the Wall Street, while in the FX market, a growing investors’ bet on an earlier-than-anticipated rate-hike had faded away, eventually weighing down the US Dollar.

Meanwhile, referring to an end of the month profit-taking wave, a senior FX strategist at TD Securities in New York, Mazen Issa said, “There’s a bit of a positioning unwind taking place, we’ve obviously seen a firmer dollar since the September Fed.

That also dovetails with the seasonal tendency for the dollar to soften into the end of the month”.

US Dollar falls as Fed’s Powell whacks away rate-hike talks

Citing statistics, in the day’s FX market wind-down, the US Dollar Index (DXY) measured against a basket of six major currencies fell by 0.17 per cent to 93.57, down from a fresh one-year peak of 94.56 hit last week.

Besides, the bloc’s common currency euro added 0.18 per cent to $1.1646, however, British Pound edged 0.03 per cent lower to $1.3785 as UK retail sales missed expectation last month. Safe-haven Swiss Franc and Japanese Yen gained 0.32 per cent and 0.19 per cent respectively to $0.9154 and 113.77 Yen per Dollar.

Aside from that, risk-sensitive and commodity-linked loonies such as Australian Dollar had outperformed most major currencies on Friday, gaining 0.43 per cent against the greenback to $0.7498.