Dollar Posts Highest Weekly Loss Since May 2021
US Dollar posted the highest weekly loss since May 2021 Friday Morning.
GoldenNewsNg reports that as of Friday morning in London, the dollar was down, settling for its biggest weekly loss in eight months. As investors bet that several U.S interest rate hikes in 2022 are already priced in, they reduced their long positions.
According to the U.S. Dollar Index, the greenback slipped 0.07% to 94.172 index points against a basket of other currencies.
The index is down about 0.9% for the week and is set for its largest weekly percentage decline since May 2021, ending a six-month rally.
The US dollar has had a tough second week of January. It has been difficult to prevent a sharp sell-off of the dollar as a result of remarks made by Federal Reserve policymakers in speeches on Capitol Hill and testimonies before Congress.
The rele ase of US dollar selling began earlier this week as Fed Chair, Jerome Powell gave his testimony at his nomination hearing. As a result of Tuesday’s December US inflation report (CPI), the DXY index went down another leg.
Despite this, today’s US dollar price has settled near critical support around testimony from incoming Fed Vice Chair, Lael Brainard.
Brainard’s remarks were very much of the ‘goldilocks’ variety, much like those of Fed Chair Powell: optimistic about the pace of the labour market recovery, but concerned about persistently high prices.
“We are experiencing the strongest rebound in growth and the lowest unemployment rate of all the recoveries in the past five decades,” Brainard said as she noted that “inflation is too high.”
Investors seem to be signalling that ending quantitative easing, hiking rates four times, and introducing quantitative tightening all within nine months of each other is so aggressive that it limits further hikes.