U.S. Dollar Continues Upswing – RBNZ Turns Interest Rate Switch

The dollar strengthened further after Jerome Powell was reappointed as chairman of the U.S. Federal Reserve (Fed).

The U.S. dollar index rose 0.08% against the other six currencies to 96.573, the highest level in 4 years. Following the two-year bond yield rose to the highest level since March 2019.

Investors expect the U.S. Federal Reserve to raise interest rates over the long term in response to ongoing inflationary pressures.

The euro fell 0.3% to $1.1205, its lowest level since early July 2020, following a downturn in the German economy in November due to manufacturing supply problems and a rising number of coronavirus cases. In addition, the business climate index fell to 96.5 from 97.7 in October.

The yen dropped 0.11% to 115 yen per dollar.

The Australian dollar fell 0.32% to 0.7204 Australian dollars.

The yuan rose 0.02% to 6.3920 per dollar.

The pound fell 0.01% to 1.3373 pounds per dollar.

The New Zealand dollar fell 0.63% to 0.6904 after the Reserve Bank of New Zealand (RBNZ) raised interest rates by less than expected, only 0.75%, and the long-term interest rate by 50 basis points.

Turkey’s lira, on the other hand, fell by more than 11% overnight. A fall in the lira could lead to further capital outflows, and it could put pressure on emerging market currencies around the world.

The baht was also influenced today by the appreciation of the dollar, which rose 0.76% to 33.360 baht per US dollar.

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