Dollar Edges Higher; Turkish Lira Continues Descent

Dollar Edges Higher; Turkish Lira Continues Descent
Dollar Edges Higher; Turkish Lira Continues Descent
© Reuters

By Peter Nurse – The dollar traded higher Friday, especially against the euro, with traders focusing on the relative speeds the major central banks are expected to respond to rising inflation levels with interest rates hikes.

At 2:30 AM ET (0730 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 95.612, just shy of its recently hit 16-month high.

fell 0.1% to 1.1354, with the pair on course for a weekly loss of around 0.8% despite recovering from a trip below 1.13 for the first time since July 2020.

rose 0.1% to 114.35, rose 0.1% to 1.3505 after the release of strong data, and the risk-sensitive was largely unchanged at 0.7282.

The latest evidence of the growing strength of the U.S. economic recovery came on Thursday in the form of the weekly report, the most timely data on the economy’s health. This showed jobless benefit claims edging down to a 20-month low in early November. 

This recovery in the labor market has occurred at the same time as consumer inflation has climbed to levels not seen in three decades, fueling the market’s assessment that the Federal Reserve will be quicker to move than many of its contemporaries.

European Central Bank President Christine Lagarde was at pains earlier this week to dismiss market expectations of early interest rate rises. Worries that Europe appears to be on the brink of a fourth wave of Covid-19 infections have added to the view that the ECB will be relatively late to the rate hike party.

This is despite German numbers showing prices rising another 3.8% on the month in October, taking the annual rate of factory gate inflation in Europe’s largest economy up to 18.4%.

“EUR/USD continues to trade on the soft side and has not pulled away from support at 1.1300,” said analysts at ING, in a note. “Not helping it, has probably been the news of record Covid case numbers in Germany, which could dent the recovery in the services sector just as the manufacturing sector is struggling with supply chain disruption.”

The economic data calendar is light Friday, and the focus is likely to be on a series of central bank speakers, with European Central Bank President Christine Lagarde, Bank of England economist Huw Pill and Federal Reserve officials Christopher Waller and Richard Clarida the highlights. 

Elsewhere, rose 0.8% to 11.0787, adding to Thursday’s sharp gains after slashed interest rates by a further 100 basis points, bowing to pressure from President Recep Tayyip Erdogan.

Thursday’s cut leaves interest rates at 15% and roughly 500 basis points below the current inflation rate.

rose 0.1% to 15.5856 after South Africa’s central bank raised its repurchase rate to 3.75% from a record-low 3.5%. That’s the first hike since November 2018 and follows 300 basis points of easing last year as the country tried to cope with the ravages of the pandemic.

fell 0.1% to 6.3811 after China’s central bank warned speculators to avoid making one-way bullish bets on the yuan, an attempt to stop the Chinese currency from appreciating too quickly. The yuan has risen over 2% against the dollar this year so far, one of few emerging market currencies to keep pace with the greenback as the Fed has prepared to tighten policy for the world’s reserve currency.


Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Leave a Reply

Your email address will not be published.

New Brokers
2.8 rating
Buy & sell Crypto in minutes
3.0 rating
Note: Investing involves risks. You can lose your deposit. We advise you to only invest in financial products which match your knowledge and experience.
2.0 rating
Interactive Brokers attracts active traders with low per-share pricing, an advanced trading platform.
4.3 rating
eToro is the world’s leading social trading platform, with thousands of options for traders and investors.
Risk Warning: The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory or other services by AdonFinance. In addition, the content of the website offers no opinion with respect to the suitability of any security or any specific investment. Trading foreign exchange, stocks, cryptocurrencies and commodities is potentially high risk and may not be suitable for all investors. The high level of leverage can work both for and against traders. Before any investment with any broker you need to carefully consider your targets, previous experience, and risk level. Forex trading can result in the loss of your money, as a result, you are expressly cautioned that you should never invest or trade with money that you cannot afford to lose. For the avoidance of doubt, AdonFinance's service provides Brokers reviews in the Financial market. AdonFinance, its subsidiaries, agents or affiliates will assume no responsibility whatsoever for your trading activity. © Copyright 2021 AdonFinance