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USD trades at one-year high against Euro, five-year peak against Yen

25 Nov 2021

The U.S. Dollar was trading near its highest point in more than a year against the Euro, and near a five-week high against the Yen. Federal Reserve policymakers’ hawkish stance, bolstered by strong U.S. data, differed from the more dovish outlooks in Europe and Japan.

The Dollar index – gauging the Dollar against six major rivals – fell 0.1% to 96.733, yet remained close to Wednesday's high at 96.938, the strongest reading since July last year.

The index has risen 2.77% in November as traders said heated inflation would lead to rate hikes sooner than indicated by Federal Reserve officials. As it stands, the market is priced for an initial quarter-point rise by June 2022, with many analysts of the opinion this could be done as soon as May, Reuters reports.

"The USD is in beast mode and just doesn’t want to go down," said Chris Weston, head of research at brokerage Pepperstone in Melbourne.

"But when things get too over-loved, the ship can often tip," he added.

Minutes from the central bank’s policy meeting earlier this month said the bank would be willing to accelerate the tapering of the bong-purchasing programme if high inflation remained, and hike rates more quickly.

There was little change to the Dollar at 115.355 Yen, not far away from the overnight top of 115.525, which has not been seen in over four years. Moreover, the Euro rose 0.13% to $1.1215, yet remained close to a 17-month low reached on Wednesday of $1.1186. The Pound increased 0.14% to $1.33465 following Wednesday’s dip of $1.3317.

Elsewhere, the Australian Dollar rose 0.06% to $0.7201, close to $0.7185 seen on Wednesday, the lowest level in two months. The New Zealand Dollar stayed at $0.6870, near the three-month low of $0.6856 from the previous day, as the central bank increased the key rate by a quarter of a percentage point to 0.75%.