Dollar heads for best week in months as Fed tightening looms – Times of India

SINGAPORE: The dollar began the last quarter of 2021 near its highest levels of the year and headed for its best week since June, as currency markets braced for U.S. interest rates to rise before those of major peers.
The euro slipped 0.1% early on Friday to $1.1572 and has fallen 1.3% this week, tumbling through major support around $1.16 to touch its lowest levels since July 2020.
The yen is down 0.6% for the week and twice as much in a fortnight as higher U.S. Treasury yields have drawn flows out of the Japanese yen into dollars. U.S. Treasury yields have surged on growing market expectations of U.S. tapering by year-end and rate hikes in 2022.
The yen bounced from a 19-month low of 112.08 per dollar on Thursday as yields settled, last trading at 111.41 per dollar. The dollar index stood at 94.327, having gained 1.1% so far this week, the largest weekly rise since late June.
A Federal Reserve meeting last week reinforced expectations for asset purchase tapering beginning this year and rate hikes starting in 2022 or early in 2023.
“As long as markets remain confident that the U.S. is going to start tightening monetary policy within a reasonable timeframe, the dollar should remain well supported and eventually rise 5-10% from current levels,” said Societe Generale strategist Kit Juckes.