Dollar rises as the US Central threatens to raise interest rates

The dollar rose on Thursday, buoyed by a sharp rise in US Treasury yields after the Federal Reserve indicated that interest rates are likely to reach a peak higher than current investor expectations, while the pound fell ahead of its monetary policy meeting. for the Bank of England.

On Wednesday, the Fed raised its key interest rate by 75 basis points to 3.75-4.0 percent, as widely expected. The dollar initially fell on hints in the Fed’s statement of smaller increases in the future, but rebounded after Bank President Jerome Powell said the fight against inflation would require increasing borrowing costs.

Powell’s comments wiped out any hopes that the US central bank would soon switch to a less hawkish policy, and pushed the dollar to a two-week high against the euro, which hit $0.9810.

The two-year US Treasury yield, which is most sensitive to changes in interest rate expectations, posted an 11 basis point rise at 4.68 percent, the highest since July 2007.

The dollar index rose 0.5% on the day to 112.70, the highest increase in a week.

Meanwhile, the sterling fell 0.5% against the dollar to 1.13325 dollars, but it fell only 0.1% against the euro to 86.22 pence per euro before the Bank of England meeting (the British central bank), during which it is expected to raise interest rates by three quarters of a percentage point to three percent, which is The largest increase since 1989.

Analysts say the Bank of England is not in the same position as the Fed, given the slowdown in the economy and the surge in British government borrowing costs since the summer.

The Japanese yen fell 0.2 percent against the dollar to 148.18 per dollar, while traders continue to anticipate any additional official intervention to support the volatile currency.

Japan spent a record $42.8 billion bolstering the yen last month through a series of unannounced purchases, after spending nearly $20 billion in September.