Dollar’s Price Has Experienced A Dip In The Overnight Trading Session, Sterling Experiences A DipDecember 21, 2022
The Friday trading session has shown that the trading price of the dollar has experienced a downtrend. The value of the dollar has retreated versus the major currencies in the European trading session on Friday.
In the previous trading session, the value of the dollar had recorded strong gains. However, the latest trading session saw the dollar price giving back some of the gains it had generated a day earlier.
This is because the central banks from around the world have taken action the tightening the monetary policies for their jurisdictions.
As the central banks continue implementing strict monetary policies, their currencies will continue surging against the dollar. This would result in the dollar price weakening against the major currencies.
Dollar Indexes 0.1% Decline
The dollar index has reportedly suffered a 0.1% dip in the latest trading session. It is the comparison of the dollar price versus the basket of six major currencies.
The report shows that the value of the dollar has dipped in the latest session and it is down to 104.123 against the major currencies. It is to be noted that overnight, the value of the DXY rose by 0.9%.
The 0.9% surge the dollar witnessed in the DXY is the strongest surge since the month of September.
Interest Rate Hikes by the Central Banks
With the inflation rates surging across the board, the central banks are taking the necessary actions to deal with the situation.
They are trying their best to deal with the situation and increase the interest rates accordingly. Just recently, it was the Swiss National Bank that increased the interest rates.
It was followed by the Bank of England, the European Central Bank, and even the Federal Reserve of the United States. As per the data, all of the mentioned banks have increased their interest rates by 50bps.
Although the US Feds have surged the interest rates as well, they are not as effective as they used to be in the past. Previously, the US Feds had been increasing the interest rates by 75 bps.
However, in the wake of the lowering of inflation rates, the US Feds decided to lower the rate hikes.
On the other hand, central banks from around the world are reducing interest rates to deal with the rising inflation rates.
The difference between the US and the other countries in the west is that the US is increasing interest rates to kill inflation for good. Other countries are doing it to mitigate the rising inflation.
Therefore, the value of the dollar is not making much progress while the values of other countries currencies are gaining momentum.
The central banks from these regions have already predicted that there will be more interest rate hikes in near future.
Therefore, the value of the USD may continue weakening while other currencies will continue growing in strength.
Value of the Dollar Compared to Other Currencies
Due to the recent developments in the forex market, the trading price of the dollar has dipped significantly against the major currencies.
However, some currencies have found themselves facing a downtrend against the dollar price. The data shows that the value of the euro has surged by 0.1% against the dollar.
Following the increase, the value of the euro surged to a high of 1.0631. Just a day back, the value of the euro was 0.5% lower than the dollar.
The value of the GBP has recorded a 0.1% dip in the latest trading session, moving down to 1.2164 versus the dollar. On Thursday, the value of the GBP experienced a 2% dip in the forex trading markets.
The value of the dollar has dipped 0.5% against the Japanese yen and it is now standing at 137.09. Then comes the value of the AUD which dipped 0.1% on Friday, followed by the USD’s dip against the CNY.