The dollar surged the most in 10 months on bets the Federal Reserve will indicate after this week’s meeting that it will hike interest rates sooner than forecasted, the first time to do so since 2006.
The greenback touched its highest level in six years against the yen as Federal Reserve Bank of San Francisco released a research paper that stated that traders may be underestimating when interest rates may be increased.
The yen declined the fifth straight week, the most this year, falling 2.1 percent to 107.34 per dollar. It hit 107.39 yen, its lowest level since Sept. 22, 2008. The euro remained slightly unchanged at $1.2963, after declining over the past eight week. It fell to $1.2860, its lowest level in 14 months, on Sept. 9. The euro advanced 2.2 percent to trade at 139.15 yen.
“The markets have shifted to expecting a more hawkish Fed statement,” Daniel Katzive, a New York-based head of foreign-exchange strategy for North America at BNP Paribas SA, told Bloomberg News. “That’s boosted U.S. front-end yields, and that should be supporting the dollar versus the euro and yen.”
The Australian dollar and the Brazilian real posted the biggest losses last week out of the dollar’s 31 major counterparts. The real fell 4.2 percent, the steepest decline since August 2013, after a survey indicated President Dilma Rousseff had gained more support for her reelection bid despite the struggling economy. The Aussie fell 3.6 percent, its biggest loss in at least a year. The ruble touched a record-low of 37.97 per dollar after U.S. and the European Union rolled out further sanctions on the country as the Ukrainian conflict continues unabated. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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