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Forex - Dollar close to 7-month peaks on Fed rate hike view

Published 2015-11-10, 03:17 a/m
© Reuters.  Dollar close to 7-month peaks on Fed rate lift off expectetions
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Investing.com - The dollar was trading close to seven-month highs against the other major currencies on Tuesday amid heightened expectations that the Federal Reserve will raise U.S. interest rates at its December meeting.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 99.09, close to Friday’s highs of 99.29, the highest level since mid-April.

Demand for the dollar continued to be underpinned after Friday’s robust U.S. jobs data paved the way for the Fed to raise interest rates at its next meeting.

The U.S. economy added 271,000 jobs last month, well ahead of the 180,000 expected by economists and the largest increase since December.

The unemployment rate fell to a seven-and-a-half year low of 5.0%.

The unexpectedly strong report underlined the diverging monetary policy expectations between the Fed and other world central banks.

The greenback pushed higher against the yen, with USD/JPY rising 0.14% to 123.33, moving back towards Friday’s highs of 123.59, the strongest since August 20.

EUR/USD was at 1.0748, not far from the seven-month low of 1.0701 set on Friday.

The single currency remained under pressure after Reuters reported on Monday that the European Central Bank could cut its deposit rate deeper into negative territory at its December meeting.

The ECB lowered its deposit rate to minus 0.2% in September 2014.

In October ECB President Mario Draghi indicated that the bank could enlarge its monetary stimulus program next month to combat persistently low levels of inflation in the single currency bloc.

Elsewhere, the euro edged higher against the yen, with EUR/JPY inching up 0.11% to 132.59.

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