Dollar jumps as investors see Fed stance unchanged; Euro, sterling pummel



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Dollar jumps as investors see Fed stance unchanged; Euro, sterling pummel

In the face of a global economic landscape that has been coming under hefty blows from multiple channels with a catastrophic inflation-surge alongside rising cost of fuel adding to an unfathomable scale of pressure, the US Dollar Index (DXY) measured against a basket of six major currencies on an average gained over 1.0 per cent on Wednesday.

In point of fact, in the day’s large-scale gain in US Dollar Index (DXY) comes over the heels of a weakening fundamental for both euro and pound, as the UK PM Liz Truss was quoted saying that the Bank of England could raise borrowing costs if it deems the moves are necessary, leading to a steep downward spiral for Pound Sterling while dealing a hefty blow to the Bank of England’s $65 billion bond repurchase program in a bid to support the nation’s currency.

Aside from that, eurozone’s energy crises have just worsened further, as OPEC+ nations had decided to slash output by 2 million barrels per day (bpd) or nearly a 2.5 per cent of entire global crude oil output at their first in-person meet since 2020 on Wednesday, eventually adding to strains on Euro while bolstering the US Dollar.

Besides, following the day’s ADP national employment report that underscored a modest run in labour market, market analysts were betting on a sustenance of an ultra-hawkish rate-hike cycle from the US Fed.

US Dollar gains as pound, euro pummel

Citing statistics, in the day’s FX market wind-down, the US Dollar Index (DXY) measured against a basket of six major currencies, climbed as much as 0.94 per cent to 111.02, while the bloc’s common currency euro shared among 19 member states fell over 1.0 per cent to $0.9892, paring yesterday’s gains.

Besides, sterling fell 1.1 per cent to $1.1344 against its American counterpart, snapping up a latest streak of six straight sessions of gains. Among other major currencies, the Kiwis and Aussies remained mostly unchanged at $0.5744 and $0.6502, respectively, against their American peer.