Around 10:45 p.m., the greenback advanced 0.93% against the euro, to 0.9792. It was also approaching a 24-year peak against the yen, hit at the end of September.
The dollar pranced again Thursday against most currencies, carried by a salvo of statements from members of the American central bank (Fed) still focused on the fight against inflation with higher rates, for a long time.
Around 8:45 p.m. GMT, the greenback advanced 0.93% against the euro, to 0.9792. It was also approaching a 24-year peak against the yen, hit at the end of September.
For Jefferies’ Brad Bechtel, this appreciation for the “greenback,” one of the dollar’s many nicknames, stems from a new series of speeches and interviews by US central bankers, which “seemed quite coordinated in their message.” “They are very, very focused on inflation and want to keep raising rates until they are satisfied” with the rate of price increases.
“We still have work to do,” Fed Minneapolis branch chairman Neel Kashkari said Thursday. “I don’t want a break (in monetary tightening) until we have evidence that underlying inflation (excluding energy and food) has really peaked and hopefully is coming down. We are far from it.”
Operators are betting more than ever on a Fed rate range between 4.50% and 4.75%, at least, by February. They even now grant a probability of 20% at a rate of 5%, or even beyond, according to the model of the CME Stock Exchange.
In tune, bond yields rose further on Thursday. The yield on 2-year US government bonds, considered more representative of market expectations in terms of monetary policy than the 10-year rate, stood at 4.25%, not far from the 4.34% reached at the end of September for the first time in 15 years.
High rates attract investors and tend to benefit the currency of the country concerned.
The “buck”, another nickname for the dollar, jostled the pound a little more, again in a bad position after a week of respite.
“Nothing has been resolved” of the British situation, argues Brad Bechtel. “It’s no surprise that the pound continues to fall.”
The effect of the Bank of England’s (BoE) decision to buy back outstanding government bonds to stabilize the bond market seems to be waning.
The yield on 10-year British government bonds resumed its ascent and reached 4.24% on Thursday, the highest since the historic day of September 28, marked by the intervention of the BoE.
For the economists of Pantheon Macroeconomics, “investors should be reassured by the savings measures that the (British) government is due to announce this month”, but they are nevertheless counting on a pound around 1.05 dollar by the end of this month. end of the year, close to its historic low (1.0350 dollar), reached on 26 September.