Foreign Exchange is a broader concept, and engagement includes people converting their current currency to another currency for tourism, commerce, and/or trade. While tourism and commerce are regular occurrences, the aspect of trade depends on the supply & demand of the currency.
The US Dollar reportedly accounts for more than 80% of the total daily traded value. Other currencies are pegged against the US Dollar to conclude their foreign exchange.
Dollar Set For Its Best Best In Four Weeks
Any slight change in the value of the US Dollar has a macro, or rather a multi-chain, effect on the global economy. The US Dollar’s performance in the market also speaks volumes about what other countries will do to better enhance their cross-border trades.
At the time of writing, the US Dollar registered a figure of 99.904 compared to the last published figure of 99.890. The figure is a new high for the US Dollar as it continues to inch towards the mark of 100 when measured against the basket of peer currencies.
The Euro gave the common currency a push to its one-month high.
An increase at the track of reaching the two-year high appears to be backed by the decision that the US Federal Reserve may soon hike the interest rate. The minutes have revealed that many favor the hike of 50 basis points.
Policymakers at the Federal Reserve have been noticed to call for a faster pace to hike the rate to control the rising inflation. Many top rated Forex brokers believe it could be a reality in the coming months.
Speculations are that the hawkish tides flowing from the US Federal Reserve concerning the hike in interest rate are playing a major role. That indeed is playing a crucial role if experts are to be believed.
Simon Harvey, the Head of Foreign Exchange Analysis at MonFX, called the recent gains fairly sustainable, adding that the markets were starting to settle on the idea of a much more hawkish Federal Reserve in the second quarter.
In comparison to the Euro, there was a drop of 0.18% to rest at $1.0855. The fall is estimated to be a side-effect of the western sanction on Russia and the European Union’s consideration to ban Russian oil from August 2022.
Simon Harvey said that there could be a further decline in EUR/USD due to sustained pressure from European energy prices and calls for more sanctions on the export of Russian energy.
The US Dollar gained against the Japanese Yen and reached 124.23, closer to its seven-year high of 125.1. Yen remains under pressure, but the Bank of Japan balances it through its interference in the bond market to keep the rates on the lower side.