News Tech: The Fed’s tightening policy has been heavily priced and eased, leading investors to avoid riskier currencies as risk appetite in financial markets has declined. Driven, the US dollar fell for a third straight day on Friday. The US Dollar Index rose 0.3% at 95.157, but looked to end the week down about 0.6%, its worst weekly reading since early September. Despite Federal Reserve Chairman Jerome Powell said the U.S. economy is poised for the start of a tightening monetary policy, in 2021 he will face a currency basket. The US dollar, up more than 6%, came under pressure this week.
On Friday, the dollar struggled to rise against the Japanese yen, while the US currency fell 0.02% to its three-week low at 114.15 yen. The safe-haven Japanese currency has benefited from the recent deterioration in risk sentiment in global financial markets. Bank of Japan policymakers are debating how soon a final rate hike could begin, which could come before inflation hits its 2% target, Reuters reported on Friday. The Australian dollar, seen as a liquid indicator of risk appetite, tumbled 0.99% to a two-day low as global equity markets weighed and government bond yields rose on Friday.
“Investors appear to believe the U.S. dollar has peaked, Fed tightening is priced in, and currencies such as the euro will offer better returns in the future,” FX strategists at Scotiabank said in a statement. “We disagree, but we have to admit that the US dollar has at least fallen back psychologically,” he said. Analysts say hedge fund dollar positions are near their highest level since early 2020, adding to selling pressure on the dollar this week. US retail sales fell in December the most he’s had in 10 months. This is probably because he started holiday shopping in October to avoid empty shelves in stores for Americans.
Investors assess the impact of a change in leadership in the country, as Prime Minister Boris Johnson faced the hardest hit following revelations about a series of Downing Street rallies during his tenure of the COVID-19 lockdown crisis. The pound fell 0.22% against the dollar. confronting. The cryptocurrency struggled to make a meaningful recovery after suffering heavy losses earlier in the week. Bitcoin rose about 1% on the day to $43,086.34, not far from its five-month low set on Monday at $39,558.70.