The dollar strengthened against major currencies as investors buy dollars as a safe-haven currency amid the conflict between Russia and Ukraine. In addition, the dollar was driven by expectations that the Federal Reserve (Fed) would raise interest rates faster and more sharply than expected in order to curb inflation.
- The dollar index against the six major currencies in a basket of currencies rose 0.3% to 95.93.
- The dollar rose 0.04% against the yen to 113.72 yen.
- The euro was down 0.11% against the yen to 128.77, and down 0.13% against the dollar to $1.133.
The United States and Britain have urged diplomats and their families to leave Ukraine urgently, while NATO has announced reinforcements because, according to their statements, Russia is ready to invade Ukraine.
The most important thing for markets to keep an eye on is the Fed’s monetary policy meeting on Jan. 25-26, which will decide March’s interest rate policy to curb inflation.
Many experts and analysts believe that the Fed will raise interest rates moderately by around 0.25%. For this purpose, interest rates are to be raised up to 4 times this year. Inflation in the U.S. has risen in the past year as strongly as not in 40 years. Now it is up to the Fed to come up with a suitable response.