US Dollar Index oscillates above 105.00 as focus shifts to Fed policy
14.06.2022, 00:24

US Dollar Index oscillates above 105.00 as focus shifts to Fed policy

  • The DXY is expected to extend its gains on expectations of an extreme hawkish stance by the Fed.
  • A 75 bps rate hike expectation has backed the DXY for refreshing its 19-year high at 105.29.
  • Higher US NFP has provided more room for the Fed to tighten its policy.

The US dollar index (DXY) is auctioning in a narrow range of 105.13-105.29 in the Asian session as the entire investing community is focusing on the interest rate decision by the Federal Reserve (Fed). Considering the galloping inflation and the upbeat US labor market, a rate hike by at least 50basis points (bps) looks imminent. Therefore, the market participants are pouring liquidity into the DXY, which has elevated the asset above 105.00 comfortably.

Refreshes 19-year high at 105.29 on higher bets over a 75 bps rate hike

The asset has refreshed its 19-year high at 105.29 on advancing odds of a 75 basis point (bps) interest rate hike by the Fed. Observing the dictations from the testimonies by Fed chair Jerome Powell, a rate hike by 75 bps is not into consideration, however current price pressures are needed to be tamed quickly and higher NFP provides more liberty to the Fed for policy tightening. The DXY is expected to extend its four-day winning streak by overstepping Monday’s high at 105.29.

Key events this week: Producer Price Index (PPI), Retail Sales, Building permits, Initial Jobless Claims.

Major events this week:  Fed interest rate decision, Eurogroup meeting, Swiss National Bank (SNB) interest rate decision, Bank of England (BOE) interest rate, Bank of Japan (BOJ) rate decision.

             

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