The US dollar is steadily strengthening against the euro and the pound sterling, having updated a 32-year high against the yen at the auction on Friday.
Experts no longer rule out that the Federal Reserve System (Fed) will bring the base interest rate to 5%, said Francesco Pesole, an analyst for the foreign exchange market at ING. The two-year US Treasury yield topped 4.6% on Friday.
“The outlook for a Fed rate hike continues to cast doubt on the possibility of a sustained rally in US stocks, and the chances that demand for the dollar as a safe haven asset will rise are quite high,” Dow Jones quoted Pesole as saying.
The ICE-calculated index, which shows the dynamics of the dollar against six currencies (the euro, the Swiss franc, the yen, the Canadian dollar, the pound sterling and the Swedish krona), adds 0.56%, the broader WSJ Dollar Index – 0.65%.
The euro/dollar pair is trading at $0.9748 as of 3:00 pm compared to $0.9788 at the market close on Thursday.
The pound sterling has fallen in price by this time to $1.1113 against $1.1239 the day before.
The pressure on the pound is exerted by both political uncertainty in the UK and signals of the continued deterioration of the situation in the country’s economy.
On the eve of Liz Truss announced her resignation as leader of the Conservative Party, which entails her resignation from the post of prime minister, where she worked for only 45 days.
Meanwhile, retail sales in the UK in September fell by 1.4% compared to the previous month, while experts on average expected them to decline by 0.5%. Retail sales last month were 1.3% lower than pre-pandemic February 2020.
The dollar against the yen is 151.54 yen against 150.15 yen at the close of the previous session. On Friday, Japanese Finance Minister Shun’ichi Suzuki again expressed concern about the sharp weakening of the yen and expressed his readiness to intervene to support the national currency.
On Friday, the Bank of Japan continued unscheduled purchases of government bonds for the second day in a row to contain the growth in the yield of ten-year bonds, which rose above the upper limit of the CBR’s target range of 0.25% per annum.
The dollar/yuan pair is trading at 7.2463 yuan/$1, compared to 7.2164 yuan/$1 at the close of the previous session. The yuan is trading near a 14-year low against the US currency during the 20th Congress of the Communist Party of China, which will end on Saturday.
