The dollar at its highest level in 7 weeks after raising interest rates
Amman2 min read
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The dollar maintained its highest level in seven weeks on Thursday, after the Federal Reserve raised interest rates and hinted at further increases in the coming months, while investors await decisions from the Bank of England later today and the Bank of Japan on Friday.
The dollar rose strongly in tandem with U.S. Treasury yields, after the new central bank chief, Kevin Warsh, joined a unanimous decision to raise interest rates, while officials indicated further monetary tightening and expected another increase in 2026.
Carol Kong, a currency analyst at Commonwealth Bank of Australia, said, "(Warsh) certainly seemed more inclined towards monetary tightening than expected, and the fact that he provided guidance on future increases surprised the markets, prompting them to reassess monetary policy towards tightening, which ultimately led to the dollar's rise."
The strength of the U.S. currency pushed the euro to trade at $1.1456 near its lowest level in seven weeks, while the British pound stabilized at $1.3377 before the Bank of England meeting later on Thursday.
The yen hovered at 156.20 against the dollar, near its lowest level in two weeks, while markets await the Bank of Japan's decision on Friday.
The dollar index, which measures the performance of the U.S. currency against a basket of currencies, reached 100.33 in its latest transactions, its strongest level since July 31.
The Australian dollar was at $0.7096 and the New Zealand dollar stabilized at $0.5713.
According to CME's FedWatch tool, markets currently expect a further U.S. interest rate hike of a quarter percentage point by the end of this year with approximately 90% probability.
Attention now turns to the Bank of Japan, which is expected to raise interest rates on Friday to their highest level in 31 years, and to indicate its readiness to continue raising borrowing costs, thereby joining other major central banks in combating persistent inflationary pressures caused by rising oil prices.
As for cryptocurrencies, the price of Bitcoin stabilized at $76,562.25.
