US Dollar Index - holds its ground as selloff

US Dollar Index – holds its ground as selloff

LONDON (Reuters) – FX SIGNALS – The dollar was on track for its best week in a month against major rivals on Friday, as the world’s reserve currency held its ground amid a selloff of riskier assets across markets.

Investor sentiment has soured in recent days due to weaker economic data, rampant inflation and concerns over the pace of U.S. Federal Reserve policy tightening.

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Stock markets in Europe opened lower in morning trading on Friday, following the trend set in Asia and on Wall Street overnight.

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“It was inevitable that if equity markets continued to decline, this more normal G10 FX pattern would emerge.”

The Aussie and Kiwi both fell more than 0.5% versus the dollar, last at $0.71860 and $0.67100.

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In cryptocurrencies, Bitcoin was also dragged lower, falling as much as 6% to $38,250 – its lowest since August.

The Swiss franc strengthened 0.4% to 0.91350 franc per dollar, while the yen gained as much as 0.4% to 113.625 yen per dollar. The yen was last up 0.1% after losing some momentum.

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Poor retail sales in Britain added to a recent flow of weaker economic data. Sales slumped 3.7% in December as consumers did much of their Christmas shopping earlier and many stayed home due to the Omicron coronavirus variant.

Dollar gains put on hold

The pound fell 0.2% versus the dollar to $1.35635, and as much as 0.5% versus the euro to 83.61 pence per euro.

The dollar eased on Friday as U.S. Treasury yields slipped back after a recent sharp rise that was fuelled by expectations that the Federal Reserve will tighten monetary policy at a faster pace than anticipated.

Dollar Up Holds Onto Biggest Gains

Markets are pricing as many as four rate hikes this year, starting from March and expect the Fed to start trimming its $8 trillion-plus balance sheet within months. The U.S. central bank meets next week to determine the timeline for tightening policy. Gold forex signals

Pound Under Pressure U.K. Services Worst Month

While the prospect of multiple rate rises should support the dollar, the index remains flat on the year.

“You would think higher interest rates would lead to a stronger dollar. But if you are told rates will go up soon and balance sheets shrink from July, why would you buy now. Just wait and then go into the higher rate structure,” said Mike Kelly, global head of multi-asset at PineBridge Investments.

US Dollar Index – holds its ground as selloff

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Dollar firm as economic

US Dollar Index – holds its ground as selloff

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