By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) – The dollar hit a new two-year high on Monday in thin and choppy trading, in line with rising U.S. Treasury yields, as investors braced for several half-a-half rate hikes -percentage point from the Federal Reserve.
Volume was light on the day, with markets in Hong Kong, Europe, Australia and New Zealand closed for Easter Monday.
The U.S. rates futures market has priced a 96% chance of 50 basis points of tightening at the Fed’s monetary policy meeting next month, and around 215 basis points of cumulative rate hikes. in 2022, which will largely support the dollar.
The greenback also hit a new 20-year high at 126.98 yen against the Japanese currency, highlighting the contrast in monetary policy between a hawkish Fed and an ultra-dovish Bank of Japan.
The benchmark 10-year US Treasury yield, meanwhile, hit a three-year high of 2.884%.
The dollar index, an indicator of the value of the greenback against the six major currencies, jumped to 100.86, the highest since April 2020. It was last up 0.3% at 100, 77.
“There is indeed a story that when the Fed plans to hike and tighten, the dollar ends up losing during those cycles, but right now there’s little optimism out there that can bring the buck down. said Juan Perez, director of FX trading at Monex USA in Washington.
Speculators’ net long bets on the U.S. dollar fell for the second straight week, according to Reuters calculations and U.S. Commodity Futures Trading Commission data released on Friday. The value of the net long dollar position was $13.22 billion for the week ended April 12. [IMM/FX]
Currency positioning lacked “a clear sense of narrative of diminishing US dollar bullish sentiment,” while a further rise in bearish bets on the Swiss franc and yen “reflected the US dollar’s yield advantage over against these two currencies – whose respective central banks are far from tightening policy,” Scotiabank said in a research note.
The yen, on the other hand, hit a 20-year low after Bank of Japan Governor Haruhiko Kuroda and Finance Minister Shunichi Suzuki expressed concerns about their currency weakening. The rally proved to be short-lived as the yen hit a fresh 20-year low in the New York session and was last up 0.3% at 126.93 yen.
“There is growing speculation of an intervention in the foreign exchange market to save the yen, although this seems unlikely,” Marios Hadjikyriacos, senior investment analyst at forex broker XM, wrote in a note. research. “Japan should step in on its own because the Americans and Europeans would not agree to weaken their own currencies in this inflationary environment, and Japanese authorities have not yet even labeled the moves ‘disorderly’ to foreshadow action.” Across the Atlantic, the euro, crippled by a lack of clarity on when rates in the eurozone would rise, was down 0.3% at $1.0782, just off last week’s low at $1.0758, a level not seen since April 2020.
Currency prices at 3:17 p.m. (7:17 p.m. GMT)
Description RIC Last US Close Pct Change YTD Pct Highest Bid Lowest Bid
Dollar index 100.7800 100.5100 +0.28% 5.349% +100.8600 +100.5000
Euro/Dollar $1.0780 $1.0810 -0.27% -5.17% +$1.0821 +$1.0770
Dollar/Yen 126.9200 126.5600 +0.30% +10.27% +126.9750 +126.2500
Euro/Yen 136.81 136.63 +0.13% +4.98% +137.0200 +136.4700
Dollar/Swiss 0.9444 0.9436 +0.08% +3.53% +0.9453 +0.9424
Pound sterling/dollar $1.3007 $1.3058 -0.38% -3.81% +$1.3064 +$1.3005
Dollar/Canadian 1.2615 1.2616 -0.02% -0.23% +1.2644 +1.2606
Aussie/Dollar $0.7349 $0.7390 -0.55% +1.11% +$0.7403 +$0.7347
Euro/Switzerland 1.0179 1.0189 -0.10% -1.83% +1.0201 +1.0175
Euro/pound sterling 0.8287 0.8277 +0.11% -1.35% +0.8296 +0.8274
New Zealand $0.6725 $0.6763 -0.58% -1.77% +$0.6776 +$0.6717
Dollar/Norway 8.8605 8.8170 +0.46% +0.54% +8.8615 +8.8250
Euro/Norway 9.5545 9.5150 +0.42% -4.58% +9.5635 +9.5133
Dollar/Sweden 9.5984 9.5479 +0.16% +6.44% +9.6152 +9.5611
Euro/Sweden 10.3482 10.3202 +0.16% +1.12% +10.3617 +10.3259
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Vidya Ranganathan in Singapore; Editing by Edwina Gibbs, Will Dunham and Marguerita Choy)
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