After the case for U.S. rate hikes gets stronger, the dollar goes up.

Asian Trade TVOctober 10, 2022

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LONDON/SYDNEY – On Monday, the dollar went up a little bit as investors looked ahead to inflation data later in the week that is expected to show that price pressures are still high.

Also, sterling fell for the fourth day in a row, even though the Bank of England (BoE) gave financial markets more help.

When U.S. data comes out on Thursday, it is expected to show that the headline inflation rate in September was 8.1%, down from 8.3% in August. It is likely that core inflation has gone up from 6.3% to 6.5%.

Data from last week showed that the unemployment rate fell more than expected and that the U.S. economy added more jobs than expected in September. Bond yields went up because traders bet more that the Federal Reserve would raise interest rates by 75 basis points in November, for the fourth meeting in a row.

Westpac strategist Sean Callow said that the data and the rise in yields because of it made the dollar “strong.”

Related: The PKR keeps winning against the dollar.

He said, “It’s more proof that the U.S. economy isn’t going down the drain.” “It just adds to the idea that the Fed will say the same thing about interest rates for the next three weeks.”

On Monday, the U.S. dollar index was up 0.33 percent at 113.18. It was up from last week’s lows around 110 and getting closer to last month’s 20-year high of 114.78. At $0.9692, the euro was down 0.4%.

In Britain, the Bank of England tried to calm worries about the end of its emergency programme to buy bonds.

The government’s plan to cut taxes and borrow more money sent the UK markets into a tailspin at the end of September. The pound fell, and the Bank of England had to step in to save bond markets.

The Bank of England (BoE) said on Monday that it was ready to buy up to 10 billion pounds ($11.07 billion) worth of gilts. This is double the amount it could buy before. It also announced a new plan to make it easier for banks to get cash.

Even though the BOE did something, sterling fell for the fourth time in a row. At the end of the day, it was down 0.42% to $1.1046, but it was still well above the record low of $1.0327 on September 26.

Geopolitical tensions and higher oil prices also made people worry about growth again, which made investors go back to the dollar.

As a response to an explosion that destroyed Russia’s only bridge to Crimea, Russia fired missiles at Kyiv and other Ukrainian cities. For the first time since July 7, the rouble fell to 63 yen per dollar.

As the dollar went up, the Aussie dollar fell to $0.6829, which was its lowest level in 2 1/2 years. The pressure on the currency grew last week when the Reserve Bank of Australia raised interest rates by less than expected. Investors are usually drawn to a country’s assets by its high interest rates.

The yen didn’t change much after falling to a point where the government had to step in to help it last month. The last price for one yen was 145.49 dollars.