Tuesday witnessed the US dollar falling below its one-year high against major peers. The primary reason behind the dip is traders keenly waiting for the US payrolls data. The information is key to assessing Fed’s tapering decision and interest rate hikes.
Contrarily, the AUD maintained its three-day gain, with trading minorly fluctuating around 0.72905 dollars. The currency touched 0.73045 dollars a day earlier, reaching its four-day high. With the Australian Reserve Bank holding a meeting, top forex brokers predict no amendments to the policy rate.
Similarly, the New Zealand dollar also stayed close to its previous session’s high of 0.6981 dollars. The currency rose from 0.6960 dollars after gaining value for three days. This week, the New Zealand Central Bank also set up a meeting, keeping the market price for a quarter-point hike.
The USD index is responsible for measuring the currency against six currencies. The index stayed flat at 93.845, slightly easing after reaching its pinnacle on Thursday (94.504.) The number was the highest since 2020 September.
The development followed a rally of around 2.8% since 3rd September since traders anticipated tapering and rate hikes. The currency also capitalized on the potential risk of global stagflation to the US debt ceiling faceoff.
Mark McCormick, TD Securities’ Global Head of FX Strategy, talked about the development. According to him, the US dollar accounts for several bad global news. The market needs to sort out the risk premium in the upcoming weeks and see how it bodes with the changes. Despite the short-term USD bias leaning higher, the market is varied about changing strategies at these levels.
Meanwhile, the Canadian dollar almost reached its one-month high, placed at 1.2558 Canadian dollars per greenback. However, the currency dipped around 0.1% to 1.2599 dollars after crude oil rallied to its three-year peak.
Sterling stayed near its four-day high, placed at 1.3640 dollars, fluctuating near 1.36005 dollars. With the week packing multiple crucial meetings, the traders need to be on their toes.