After the release of yet another infuriating U.S. inflation number, the U.S dollar steadied in the European trading session on Friday. On the other hand, the Great Britain pound retraced from intense overnight gains, which were reaped by investors after the market speculated a pull of the tax-cut policy by the British government.
After a 0.5% decline in yesterday’s session, the Dollar Index, which measures the dollar against a basket of six other strong currencies, hit 112.350. As apprehensions about global central bank policies, climbing inflation, and dreads of recession have affected the market’s risk appetite, the U.S. dollar has been on the rise. Analysts state that until the global economy slows down and the economic expansion begins to revive again, the dollar is likely to keep mounting.
In another area, GBP/USD dropped 0.2% to 1.1303 after earning a lot overnight on reports that the U.K’s government might change its plans for big unfunded tax plans. Previously, the program to fund a huge tax cut with borrowing critically impacted the U.K. bond market and sterling; therefore, the Bank of England had to interfere to restore tranquility by declaring an emergency bond-buying program that would end later on Friday.
Moreover, after Germany’s wholesale price index increased in September by 19.9% year-over-year and 1.6% month-over-month, primarily due to spiking costs for raw materials and intermediate products, EUR/USD remained unchanged at 0.9773.
The USD/JPY traded at 147.47, up 0.2% from the previous session’s 32-year high of 147.66. This may imply that investors are still looking for intervention by the Japanese government to support the slumping currency.
In the future, the fate of currencies depends upon the all-powerful U.S dollar Index, which relies upon the aggressive monetary policy of the Federal Bank.
On the other hand, the rate of mortgage has surged above 6.5% to a 16-year high from less than 3% one year ago. The result has been a slowdown in home buying and construction and softer sales of home furnishings.
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