TOKYO, Oct. 7 (Reuters) – The dollar held close to a 14-month high against the euro on Thursday, as a surge in energy prices increased the risk for the Federal Reserve of act sooner to normalize its policy.
The US currency was flat at $ 1.15525 per euro after strengthening to $ 1.1529 on Wednesday for the first time since July of last year.
The dollar index, which measures the greenback against a basket of six rivals, was little changed at 94.252 after rising nearly 0.5% in the past two sessions. That brought it back near the one-year high of 94.504 reached last week.
The Japanese yen, another safe haven, was broadly flat at 111.44 per dollar, near the midpoint of its range of the last week and a half.
Overnight, crude oil hit a seven-year high before pausing after its recent sizzling gains, while natural gas hit a record high in Europe and coal prices from major exporters also hit. historic peaks. Read more
The Federal Reserve, which has so far mainly argued that inflationary pressures will prove transient, has said it will likely start cutting back on monthly bond purchases as early as November, before continuing with interest rate hikes. , which could occur as early as next year. . Read more
Friday’s closely watched nonfarm wage report could provide additional clues on the timing of the Fed’s next moves. Economists expect continued improvement in the labor market, with a consensus forecast of 473,000 jobs created in September, according to a Reuters poll.
“The Fed’s recent hawkish turn, combined with the still accommodative stance of the European Central Bank and the Bank of Japan, should keep the dollar strong at least until the end of the year,” said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset. Management.
The dollar will also continue to benefit from its role as a safe haven, as high energy prices and concerns about a slowdown in China persist until 2021, he said.
A Reuters poll of FX strategists found that the majority expect the dollar to remain dominant in the near term before losing ground to its peers a year from now. Read more
Elsewhere, nervousness around the U.S. debt ceiling – which had perversely supported the dollar – eased somewhat after the Senate appeared close to a temporary deal to avoid a federal debt default in the next two weeks. Read more
Senate top Republican Mitch McConnell has proposed that his party allow an extension of the federal debt ceiling until December.
“This extension may alleviate some of the short-term upside risk facing the US dollar, but it will take a more resolute deal than throwing the box down the road to eliminate the upside risk to the US dollar,” said writes the strategists of the Commonwealth Bank of Australia in a client note.
In the digital currency space, bitcoin, the world’s largest cryptocurrency by market value, hovered near a nearly five-month high of $ 55,800 hit on Wednesday, trading for the last time. around $ 54,776.
Price of currency offers at 0556 GMT
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Reporting by Kevin Buckland; Editing by Muralikumar Anantharaman
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