The US dollar extended its gains on Thursday, hovering near its strongest levels of the year. This comes as surging crude oil prices threaten to exacerbate inflation, potentially forcing central banks to adopt more hawkish monetary policies.
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The greenback rose against the Euro, Yen, British Pound, and New Zealand Dollar for the third consecutive day. The rally coincided with rising oil prices, which have dampened investor confidence.
Economists warn that high oil prices will drive up energy costs and curb global growth, noting that risks escalate the longer the war persists. Oil market volatility continued as prices pushed higher, with Brent crude futures surpassing $100 per barrel.
Currency Performance
Euro: Fell 0.2% to $1.1540 in Asian trading, nearing its lowest level since November.
Yen: Dropped 0.2% to 159.23 per dollar, approaching its weakest point since July 2024.
Australian Dollar: Declined 0.4% to $0.7122.
New Zealand Dollar: Slipped 0.3% to $0.5897.
British Pound: Fell 0.3% to $1.3374, trading just above its year-to-date low.
Monetary Policy Shifts
There are growing indications that traders expect central banks to tighten monetary policy faster than previously anticipated. According to LSEG data, expectations now suggest the European Central Bank (ECB) could raise interest rates as early as June. Additionally, the Reserve Bank of Australia (RBA) may hike rates at its meeting next week and again in May.
According to the CME FedWatch Tool, Fed fund futures show that traders are scaling back bets on an imminent rate cut by the U.S. Federal Reserve, with no cuts expected until at least September.
Market Indices & Crypto
Dollar Index (DXY): Stabilized at 99.442, near its highest level since November.
Offshore Yuan: The dollar gained 0.1% against the Yuan, reaching 6.8834.
Cryptocurrencies: Bitcoin fell 1.7% to $69,457.41, while Ether dropped 2% to $2,026.88.
Source: Reuters
