The dollar rises as traders anticipate a faster rate hike.


The dollar rises as traders anticipate a faster rate hike.

The dollar rose on Wednesday as statistics showed rising US inflation and investors anticipated the minutes of the Federal Reserve’s most recent policy meeting.

Oil prices climbed on Monday, a day after the US and a few other petroleum-consuming countries drew on their strategic reserves to combat rising prices.

“The dollar has extended its gains and is on track to conclude the week higher for the fifth week in a row, backed by rising rates with faster tapering forecasts, stronger data, and worries for the eurozone with mounting Covid cases,” according to ThinkMarkets analyst Fawad Razaqzada.

As the economy improves and inflation rises, recent market movements imply that the Fed may taper, or wind down, its bond-buying program sooner than expected and raise US interest rates next year.

According to the government, prices in the United States increased by 5% last month compared to October 2020, as the inflation wave advanced.

Data also indicated that initial jobless benefit claims fell to 199,000 last week, the lowest level since November 1969, and well below the Covid-19 pandemic-caused mass layoffs.

“Today’s economic data also serve to strengthen the recent narrative that the Federal Reserve is behind the curve in terms of reducing stimulus, which is driving the US dollar higher,” said CMC Markets market analyst Michael Hewson.

The Reserve Bank of New Zealand raised interest rates for the second month in a row on Wednesday, joining an increasing number of countries that have done so.

In late morning trading, US markets were neutral, with the Dow down 0.1 percent.

Crude prices extended their gains from Tuesday, when the US and other countries’ decision to access strategic petroleum stocks was less than expected.

A recent spike in oil prices has heightened fears that inflation, which is already at multi-year highs, will continue to increase, placing additional pressure on banks to reverse the loose money measures implemented at the start of the pandemic and vital to the stock market’s 18-month rally.

At OPEC’s next meeting, the president of the International Energy Agency urged the group to take “necessary steps” to cut oil prices.

Investors are especially concerned about the rising number of Covid cases in Europe.

“European markets have had another mixed session, with the DAX falling under pressure amid fears that the new German government, led by new Chancellor Olaf Scholz, is on the verge of imposing yet another full-scale lockdown in an attempt to stem the flow of capital out of the country. The Washington Newsday Brief News is a daily newspaper published in Washington, D.C.


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