The dollar is moderately rising against a basket of major world currencies on Tuesday morning, strengthening for the fifth session in a row on expectations of new rate hikes by the Federal Reserve.
The ICE-calculated index, which shows the dynamics of the US dollar against six currencies (the euro, the Swiss franc, the yen, the Canadian dollar, the pound sterling and the Swedish krona), is growing by 0.24%, the broader WSJ Dollar – by 0.22%.
The euro/dollar pair is trading at $0.9687 by 8:53 pm compared to $0.9704 at the close of the session on Monday, the euro is losing about 0.2%.
The exchange rate of the US currency against the yen is 145.79 yen compared to 145.72 yen the day before, keeping close to the highest level in 24 years, which provokes expectations of new interventions to support the yen from the Japanese government.
The pound fell 0.3% to $1.1028 compared to $1.1057 at the close of the previous session.
By the beginning of next year, the level of the key interest rate in the US may slightly exceed 4.5%, according to the chairman of the Federal Reserve Bank (FRB) of Chicago, Charles Evans. According to him, the Fed will need to keep rates high for some time to cool the economy and the labor market.
Meanwhile, Fed Vice Chair Leil Brainard on the eve noted the need for tightening monetary policy to slow inflation, but added that the central bank’s decisions would depend on incoming statistical data.
The dollar also supports the demand for defensive assets, which increased after the speeches of the heads of the International Monetary Fund and the World Bank. In a joint event on Monday, they warned of rising risks of a global recession amid slower growth in advanced economies, record inflation and rising interest rates.
The IMF estimates that countries that account for about a third of global GDP will face at least two quarters of economic decline this year and next, and by the end of 2026 the global economy will lose about $4 trillion.
