Band Tom Westbrook
SYDNEY, November 19 (Reuters) – The dollar was expected to post a second week of strong gains against the euro on Friday as traders bet on interest rates rising faster and further on the west side of the North Atlantic, while the pound sterling and the kiwi also strengthened with bets on a rate hike.
In emerging markets, a growing currency crisis in Turkey has pushed the lira TRYRTOM = D3 to a record low after the central bank – facing political pressure – cut rates despite inflation close to 20%.
Among the majors the euro EUR = EBS was the big driver of the week, and although it rallied to $ 1.1372 after falling to $ 1.1263, traders said it remains vulnerable as fundamentals and positioning swing in favor of the dollar.
The single currency lost 0.6% this week, helping the dollar index = USD increase 0.5% and hit a 16 month high. It last sat just below that at 95.531.
“Previous post-GFC occasions when the euro traded below $ 1.10 were accompanied by a significant short position in the euro,” said Kit Juckes, strategist at Societe Generale.
“If the question is ‘is the market going to get really short euros now,’ then I think the answer is it will be unless the data improves dramatically.”
This week, US retail sales have beaten expectations on the heels of surprise inflation last week. In Europe, meanwhile, COVID-19 is on the rise again, car sales have fallen for a fourth consecutive month and central bankers pledge to keep rates low.
Friday’s moves were light and the focus will be on central bank speakers, with European Central Bank President Christine Lagarde at 08:30 GMT, Bank of England economist Huw Pill at 12:00 GMT and Federal Reserve officials Christopher Waller and Richard Clarida at 3:45 p.m. GMT and 5:15 p.m. GMT the highlights.
Elsewhere the yen JPY = EBS was heading for a weekly loss of around 0.4%, although at 114.27 per dollar it has also recovered since hitting an almost five-year low at 114.97 ago A few days.
The Australian dollar strongly shorted and sensitive to commodities AUD = D3 is expected to suffer a third consecutive weekly loss and has come under pressure from falling oil prices in recent days. It was last stable at $ 0.7277. EUR /
Sterling GBP = D3 was the best performer besides the dollar among G10 currencies and gained around 0.7% to $ 1.3499 as a surge in inflation to its highest level in 10 years strengthened bets on the Bank of England rate hike in one month. BO WATCH
The kiwi NZD = D3 Also jumped 0.7% overnight and is flat for the week as traders start betting on the RBNZ becoming more hawkish and raising rates by 50 basis points (bps) next week, or maybe be raising its long-term rate path.
Swap markets have estimated a probability of around 40% of a 50 basis point hike. RBNZ WATCH
“Fixed income markets remain nervous and the data has pushed the two-year swap to a new high for the year, and this in turn has put the offer behind the kiwi,” ANZ Bank analysts said. .
“With 36bp (of hikes) forecast for next week and 198bp forecast for the next eight meetings, local markets could prepare for a real disappointment if we get ‘only’ a 25bp hike, as we do. expect it. “
Bitcoin BTC = BTSP was heading for its worst week since May, falling 13%. It was last near a three-week low at $ 57,033.
Price of currency offers at 0029 GMT
US Close previous session
Percentage change for the current year
EUR = EBS
Dollar / Yen
JPY = EBS
Euro / yen
EURJPY = EBS
Dollar / Switzerland
CHF = EBS
Pound sterling / dollar
GBP = D3
CAD = D3
Australia / Dollar
AUD = D3
New Zealand dollar / Dollar
NZD = D3
All spots FX =
Tokyo spots AFX =
Points of Europe EFF =
Volatilities VOLFX =
BOJ Tokyo Forex Market Information TKYFX
Global exchange rateshttps://tmsnrt.rs/2RBWI5E
(Report by Tom Westbrook edited by Shri Navaratnam)
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