Precise Investors

Monday, January 30, 2023

Dollar high on recession worries

recession worries

The dollar index edged 0.06% lower to 104.45 in early Asia trading

The safe-haven dollar held just below the month’s high against the yen on Friday and maintained overnight gains versus other peers amid growing worries that continued monetary tightening at the world’s biggest central banks could trigger a recession.

European Central Bank President Christine Lagarde said after the policy board raised interest rates again overnight that ‘this is not enough,’ and that the bank must ‘continue the battle against inflation at a steady pace.’

A day earlier, the US Federal Reserve also tightened policy, with Chair Jerome Powell adding policymakers expected rates to rise higher and stay elevated for longer.

It has been a big night in markets, with the modestly ‘risk-off’ reaction to the Fed on Wednesday from what was seen as a slightly more hawkish than expected set of outcomes, greatly exacerbated by the messaging out of the ECB’s meeting, Ray Attrill, head of foreign-exchange strategy at National Australia Bank, wrote in a note.

The dollar index, which gauges the currency against the euro, yen and four other peers, edged 0.06% lower to 104.45 in early Asia trading, but following a 0.85% surge overnight, its biggest since late September.

It has been a volatile week for the greenback though, which has it ultimately on track for a 0.47% decline.

The dollar climbed as high as 138.18 yen on Thursday for the first time since Nov. 30, ending that day with a 1.68% gain. On Friday, it eased back 0.18% to 137.51 yen.

The euro added 0.08% to $1.0637, rebounding slightly from Thursday’s 0.49% retreat.

Sterling, which is also part of the dollar index, gained 0.11% to $1.21945, following a 1.99% tumble the previous day.

The Bank of England raised its key interest rate on Thursday as well and indicated more hikes were likely. However, investors bet that the BoE might be getting close to the end of its increases in borrowing costs.


The articles are for information purposes only and Precise Investors shall not be held responsible for any errors, omissions or inaccuracies within it. Any rules or regulations mentioned within the website are those relevant at the time of publication and may not be the most up-to-date.

Precise Investors does not endorse any of the products or services that appear on it or are linked to it and are not liable for any action that you may take as a result of the content of this website, or losses or damage you may incur doing so.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Please remember that investments of any type may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

Leave a Reply