As traders wait to review the inflation data of the United States of America, the US Dollar has gone up against the Japanese Yen. It has now touched a value that is the highest in the last one month.
This rise is said to be boosted by a climb in Treasury yields to multi-year peaks overnight. Euro is maintaining its hawkish tone in an attempt to control the short-term rise of the US Dollar against it.
Dollar On The Rise
Taking Euro’s case a bit forward, it is withdrawing from the 3-month high against the Japanese Yen. What resulted was the comment by Christine Lagarde, the President of the European Central Bank, that tapped down the expectation of an aggressive hike in the interest rate.
Looking at the current states of the US Dollar and Euro, most regulated brokers would advise a trader to adopt the wait-and-see approach.
However, the European Central Bank and the US Fed both have adopted the hawkish tone, resulting in the soaring of yields on the European zone and the US Debt, expecting rates to rise faster than expected.
The US Dollar and Japanese Yen are contesting for a better value. As per the recently registered figures, the US Dollar rose to 115.96 before closing the trade with a pulled back value of 115.43.
The value of 115.96 is the highest to be registered since January 10. A pullback does not harm a lot but signifies that fluctuation is bound to occur at certain points.
Another participant that witnessed a figure that is worth to be noted was the treasury yield. Its past 10-years value surged to 1.97%, the highest since November 2019. On the other hand, the 2-year note of yield reached 1.347, the highest since February 2020.
CME’s FedWatch Tool is predicting how much interest rate will be hiked in the meeting of the US policymakers that is scheduled for March. According to its data, nearly 70% of the market is favoring a hike of 25 basis points, and the remaining 30% of the market is estimating a hike of 50 basis points.
These are merely the pricing estimates by the market. The final call will be available for review once the US policymakers conclude their meeting.
A statement on the US inflation rate has also come under the light. According to Mary Doly, San Francisco Fed President, one can expect the rate of inflation in the United States of America to rise further than the current peak, only to recover later in the future.
Meanwhile, the Dollar index has bounced back from the value of 95.136. It now stands at 95.614. Reportedly, it had touched the highest value of 97.441 at the end of last month.
The European Central Bank will keep track of the development of the US dollar to ensure that there is no unnecessary gain in the short term. The medium-term gain of the US Dollar is, however, as good as it should be.