Prior To Inflation Data Release, USD Has Surged Against Most Of The CurrenciesDecember 14, 2022
The dollar recorded a significant surge against a vast majority of the currencies on Monday. The particular trading session turned out to be choppy as the investors wait for the inflation data.
This time, it is the key data that the traders expect the US Feds will be sharing giving a better idea of the inflation data. The US Feds are going to share the inflation data for November.
Just like the old times, the inflation data would be a comparison between the last November and the same month from the last year.
There are also speculations that in either case, the Feds may not increase the interest rates. They may have to side with lowering the interest rates under any circumstances.
The meeting is expected to take place starting Wednesday and will go on until the end of Thursday. The minutes of the meeting will be shared on Friday which would set the dollar on a new course.
Over 8% Decline of DXY
It was the month of September when the trading price of the dollar had experienced the strongest pump against most of the currencies.
In the same month, the US Dollar index (DXY) demonstrated very strong surges. The September report shows that it was the highest pump recorded by the DXY in the year entire year.
Since then, the value of the dollar has continued moving in the descending channel. Although the month of October was also strong it wasn’t as strong as September.
Then came November when the dollar price started to experience a significant downtrend. The value of the dollar continued to plummet and November proved to be the worst month for the DXY.
The November report shows that in the particular month, the DXY recorded an over 8% dip.
With the DXY moving in the negative channel, it was expected that lower yields from assets would see a decline in their appeal.
All of this happened because the traders and the economists speculated that the Feds would lower the interest rates. This would eventually cause a major decline in the appeal of assets that once brought in strong yields.
Dollar Price Action against Currencies
The results from the afternoon trading show that the value of the dollar demonstrated strong gains against major currencies.
All major currencies such as the New Zealand dollar, the Australian dollar, the Swiss franc, and the Japanese yen, experienced dips versus the US dollar.
The report shows that the value of the New Zealand dollar dipped 0.5% against the US dollar. The value of the Australian dollar dipped 0.7% against the greenback.
The value of the US dollar surged 0.2% versus the greenback while the value of the US dollar surged 0.8% against the Japanese yen.
The Swiss franc currently trades at 0.9348 francs while the Japanese yen trades at 137.71 yen.
As far as the value of the euro is concerned against the dollar, it has remained flat in the Monday trading session. At the time of writing, the value of the euro against the dollar remains at $1.0535.
The Euro has Performance Well
It is worth mentioning that the value of the euro has performed well against the dollar in the fourth quarter.
In the same quarter, the European Central Bank decided that it will be increasing the interest rates aggressively to fight inflation.
With the new policy in place, the value of the euro has continued surging and the same trend has been recorded throughout the fourth quarter.
At the moment, the trading price of the euro versus the dollar is $1.0535. In the fourth quarter alone, the value of the euro surged 8% against the value of the dollar.
If the European Feds go with a similar policy as the US Feds, it would mean the value of the euro would continue rising against the dollar.
This is because the US Feds are expected to lower the interest rates starting January 2023.