USD buoyed by Fed rate hike expectations
Friday 28 January, 2022
Daily Currency UpdateThe US dollar consolidated gains on Friday and was on its way to its biggest weekly rise in more than six months against other major currencies as markets priced a year ahead of interest rate hikes. Demand for the dollar climbed yesterday, supported by a stellar fourth quarter 2021 GDP release. The advanced reading showed a 6.9% year-over-year increase in growth, its biggest rise since 1984. Analysts attribute the bounce back to the loose monetary policy enacted by the Federal Reserve to help shelter the economy from the impact of COVID-19. The US Dollar Index was sitting at 97.08.
Key MoversGBPUSD rebounded on Friday after coming under pressure from USD strength on Thursday, trading at 1.3418 at the time of writing. GBPEUR was trading just above 1.20 at the time of writing, with some analysts saying that the pair is probably buoyed by market expectations that the Bank of England will choose to hike rates again next Thursday. Chances of a hike being announced by BoE Governor Andrew Bailey are around 80-90%, however the pace of future hikes will likely be key to the pound’s direction as we head towards spring. AUDUSD fell again on Friday as investors appeared content in ignoring the majority of macroeconomic data sets and let US interest rate and Fed policy expectations continue to drive direction. AUDUSD was down 0.52% at 0.69975 at the time of writing.
- EUR/USD: 1.1123 - 1.1169 ▲
- GBP/USD: 1.3366 - 1.3431 ▲
- AUD/USD: 0.6971 - 0.7053 ▼
- USD/CAD: 1.2702 - 1.2795 ▲