Dollar extends gains on Fed rate hike expectations
October 21, 2022 / 8:37 AM
Sharjah24 – AFP: The dollar extended gains Friday on expectations the Federal Reserve will press ahead with its programme of bumper interest rate hikes for the rest of the year.
Traders were girding for another possible intervention by Tokyo after the yen sank past 150 per dollar, while sterling remained under pressure owing to uncertainty in Westminster after Prime Minister Liz Truss resigned after just six weeks in office.
The fear that has gripped markets for most of the year returned after a brief respite at the start of the week, sending equity markets back into the red, with a series of better-than-expected earnings results unable to lift the gloom.
The dollar burst to a new 32-year high against the yen on Thursday as investors bet the Fed will ramp up borrowing costs much more as it struggles to rein in prices, while the Bank of Japan refuses to budge from its ultra-loose policies citing the need to support the torpid economy.
Even data Friday showing Japanese inflation hit an eight-year high last month -- or more than 30 years when excluding VAT rises -- was unable to change expectations that the central bank will continue to hold firm.
With the dollar sitting around 150.20 yen, there is a growing sense that authorities in Tokyo will step in to support their currency, though analysts warned that such moves rarely have a lasting effect. The last intervention was on September 22, when the dollar hit 145.90 yen.