FOREX-Dollar Holding Firm; Yen Dips Further on LDP Victory

On Monday, the dollar witnessed good trading with a 2 1/2 -week high due to boosted inflation in the US and earlier interest rate hike by the Federal Reserve. The Japanese Yen, which is a safe haven, dropped, approaching a one-and-a-half-week high, as the governing party’s strong performance in weekend elections lessened political uncertainty. The dollar index, which compares the currency to six other currencies, saw a slight change of 94.166, lingering near Friday’s high of 94.302.

The dollar purchased 114.175 yen, up 0.13 percent from the previous week’s close. The highest level since Oct. 20, when it touched a multi-year high of 114.695, would be above 114.41. In Sunday’s parliamentary election, the ruling Liberal Democratic Party surprised predictions. It is the party of Fumio Kishida, the new Japanese Prime Minister. It won a large majority, cementing his position in a turbulent party and allowing him to increase stimulus spending. 

The Federal Open Market Committee will be announcing a withdrawal of stimulus on Tuesday, bringing monetary policy in the United States and worldwide into sharp focus this week. The Fed’s preferred inflation indicator and the government’s index of core personal consumption expenditures increased by 4.4 percent, confirming expectations of the market on a hike of the rate by next year.

Following the release of the data, futures on the federal funds rate, (which tracks expectations of short-term rate)  is priced at a 90% likelihood of tightening the quarter-point by mid-June 2022, with another rate hike in December factored in. Top US forex brokers are looking forward to more such hikes and other market aspects. Click here to know more about best forex brokers.

The Australian dollar fell 0.14 percent to $0.7509, continuing to slide from last week’s nearly high of four-month $0.75555. On Thursday, the Bank of England will publish its policy decision, with markets speculating whether the monetary body would hike rates at the meeting.

Sterling fell to $1.36775, having previously fallen to $1.3663 for the first time since mid-October. Moreover, the Euro also traded at $1.15575, close to Friday’s low of $1.1535, its lowest level from October 13.

Trevor Holman

Trevor Holman follows crypto industry since 2011. He joined CryptoNewsZ as a news writer and he provides technical analysis pieces and current market data. He is also an avid trader. In his free time, he loves to explore unexplored places.

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