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MT4.MT5 foreign exchange European trading: GBP soars, trend analysis

发布时间：2022-08-25 浏览：119

Investing.com - The U.S. dollar edged up in European trade on Thursday as the U.S. Federal Reserve remained near 20-year highs amid a hawkish tone from the Federal Reserve.

 

As of 17:34 Beijing time (05:34 a.m. ET), U.S. dollar index futures, which measure the greenback's strength against six trade-weighted major currencies, fell 0.18% to 106.710, after climbing to a two-year high of 107.067 yesterday.

 

The U.S. dollar index is up nearly 12% so far this year, on track for its best performance since 2014.

 

A number of factors have driven the dollar's strength, chief among them the aggressive tightening of monetary policy by the Federal Reserve amid the worst inflationary pressures in decades.

 

The minutes of the Fed meeting released on Wednesday indicated that the bank may adopt "tighter" monetary policy to curb inflation. Investors now expect another 75 basis point rate hike from the Fed in July.

 

At the same time, tightening by the Federal Reserve and other central banks could drag on a global recession, but the U.S. is more likely than most countries to weather the recession.

 

"The important question for financial markets is whether a worsening growth outlook will trigger a shortening of the tightening cycle - particularly the Fed's tightening cycle," said analysts at ING.

 

EUR/USD was up 0.16% at 1.0197, having fallen to 1.0160 on Wednesday, its lowest level since 2002, as Europe's energy crisis seriously threatened the region's economic outlook.

 

Later on Thursday, the ECB will release the minutes of its meeting after officials said a 50 basis point rate hike in July would be appropriate.

 

Currently, European inflation is at a record high, while soaring energy prices suggest that upward pressure on consumer prices (CPI) will remain high. Meanwhile, German industrial output rose just 0.2% month-on-month in May, a sharp slowdown from a revised 1.3% in the previous month.

 

"The question is how far the ECB can tighten policy before the economy ends growth," ING said.

 

GBP/USD was up 0.49% at 1.1988 after hitting a near two-year low earlier. British Prime Minister Boris Johnson is reportedly set to resign today, two days after more than 50 people in Johnson's government resigned, including former chancellor Rishi Sunak, who was later replaced by Nadhim Zahawi.

 

"It is unclear whether the new finance minister, Nadhim Zahawi, will adjust economic policy, but he may ease fiscal policy earlier than expected," ING said.

 

USD/JPY was up 0.10% at 136.07. Aussie/USD, which is highly risk-sensitive, was up 0.89% at 0.6835, helped by a rebound in global stock markets.

 

USD/Polish zloty fell 0.05% to 4.6909, the Polish central bank will announce an interest rate decision today, and is expected to raise interest rates for the 10th consecutive month in order to curb inflation. Economists widely expect Poland's central bank to raise its benchmark interest rate by 75 basis points to 6.75%.