Dollar weakens on expectations of end to Fed hikes < Bonds/Forex < Text of article

(New York = Yonhap Infomax) Correspondent Suyeon Bae = The value of the dollar continued its weakening trend. This was interpreted as the effect of a large amount of position adjustment stock being sold ahead of the Thanksgiving holiday. It is expected that the relief that the Federal Reserve System (Fed), the U.S. central bank, has finished raising its base interest rate will support the recovery of risk preference for the time being.

According to Yonhap Infomax (screen number 6411), as of 9 a.m. on the 20th (hereinafter referred to as Eastern time), the dollar recorded 148.510 yen in the New York foreign exchange market, down 1.178 yen (0.79%) from the previous New York price of 149.688 yen.

The euro moved at $1.09250 per euro, up $0.00167 (0.15%) from the battlefield price of $1.09083.

The euro recorded 162.604 yen per euro, down 1.03 yen (0.63%) from the previous price of 163.28 yen.

The dollar index, which reflects the dollar’s value against six major currencies, recorded 103.604, down 0.24% from 103.854 at the previous day.

The dollar index showed a downward trend, hitting 103.463 at one point, reflecting the overall weakness of the dollar. With the Federal Reserve’s policy of raising interest rates virtually completed, expectations are rising that it will turn to lower rates next year. The forecast has been raised that the Federal Reserve will ease monetary policy by lowering the base interest rate next year, thereby weakening demand for U.S. fixed-rate assets and the dollar.

It is expected that the gap between major countries’ central banks and monetary policy differentiation will narrow.

The Japanese yen, which had weakened sharply against the dollar, reacted most sensitively. This is because the Bank of Japan (BOJ) is expected to stick to its ultra-loose monetary policy and the gap in other differentiations will be narrowed.

The dollar-yen exchange rate soared to 151.940 yen at one point on the 13th and then fell to the 148 yen level on that day. This means that the value of the yen has risen.

The fact that the People’s Bank of China (PBOC) froze the Loan Prime Rate (LPR), which is the de facto base rate, also became a factor supporting Asian currencies, including the yen. The offshore dollar-yuan exchange rate was quoted at around 7.17 yuan, a sharp drop from the previous day’s closing price of 7.2174 yuan. This means that the yuan has become stronger.

The euro also performed well against the dollar, hitting $1.09400 at one point. This was interpreted as a result of the recovery in risk preference.

The news that international credit rating agency Moody’s raised Portugal’s national credit rating by two levels also supported the strength of the euro. Moody’s upgraded the credit rating of Portugal’s government bonds from Baa2 to A3, saying the medium-term growth outlook is “solid,” and also evaluated the credit rating outlook as “stable.” Portugal’s debt-to-GDP ratio was the third highest in the Eurozone (20 countries that use the euro) last year, but is expected to rank sixth this year as it falls below the level of France, Spain, and Belgium.

The market is now paying close attention to position adjustments due to the Thanksgiving holiday on the 23rd.

Prior to this, the minutes of the Federal Open Market Committee (FOMC) of the US Federal Reserve, which will be released on the 21st, are also of great interest. This is because after the November FOMC meeting, the market wants to reconfirm through the minutes that the Federal Reserve has virtually ended its policy of raising interest rates.

Dan Sekoff, a strategist at Nordea, said, “The dollar’s weakness is related to bond market movements, especially after the November Federal Reserve meeting and last week’s CPI.”

However, he emphasized that the dollar’s weakness may only last for a very short period of time.

“From a technical standpoint, the dollar now appears to be oversold relative to the euro,” he said, adding, “Generally, we will see some sort of consolidation process.”

[email protected]

(end)

This article was published at 23:10 on the Infomax financial information terminal.