The dollar is set to record its biggest drop in two consecutive days in nearly 14 years on Friday as investors flock to riskier assets after a lower US inflation reading helped calm expectations that the Federal Reserve will continue to raise interest rates at the same rapid pace.
Thursday’s data showed that the consumer price index rose 7.7% yoy in October, marking the smallest increase since January and missing expectations for an 8% rise.
The dollar recorded its largest decline since late 2015 on Thursday, with US Treasury yields declining, while other currencies, notably the yen and pound, rose.
Investors’ risk appetite has received a further boost from Chinese health authorities who have relaxed some tight restrictions related to the COVID-19 virus, including shorter quarantine periods for contacts and people from abroad.
The dollar index fell roughly 1% after losing more than 3% in the past two days, the largest two-day decline since March 2009.
The dollar was up 12% this year against a basket of major competing currencies, in light of the US Central Bank’s determination to curb inflation and bring it back to close to the 2% target, after nearly surpassing 10% all the time. beginning of the year.
The US currency has fallen in recent trade by 1% against its Japanese counterpart, posting 139.54 yen. The dollar was up 22% against the yen this year, the biggest jump since 1979, when it rose 24%.
The yuan also rose as investors were optimistic about a slight easing of Covid restrictions, despite a sharp rise in the number of cases across the country.
The yuan rose in offshore trading by 1.3%, reaching its highest level in more than a month against the dollar at 7.0592 yuan per dollar.
The pound made up for overnight losses against the dollar and the euro, after showing … British data The economy did not contract as expected in the three months to September, although it will likely enter what is believed to be a protracted recession.
The pound rose 0.4% against the dollar, posting $ 1.1756, a day after its largest daily rise since 2017, while it fell 0.4% against the euro to 87.47 pence.
The euro extended the previous session’s gains of 2%, up 0.8% to $ 1.0296, and has been trading close to its highest level since August.
As for Bitcoin, it fell 1.3% to $ 17,348, after plunging below $ 16,000 this week for the first time since late 2020.
