Following Jerome Hayden Powell, who is the Chairman of the United States Federal Reserve System, hinting that interest rates might remain higher for longer to rein in skyrocketing inflation, the Dollar soared to a 20 year high compared to several other currencies.
Early Asian trade saw the US Dollar Index (DXY) rise to a new 20 years high of around 109.4, as the power of the Dollar pushed other important currencies to new lows and put force on its counterparts in emerging countries.
In early Asian trading, the US Dollar reached 138.59 Japanese Yen (JPY), its highest level since the 21st of July, and was last seen up by 0.59% to around 138.485. The offshore Chinese Yuan (CNY) also dropped down, reaching 6.9321 per US Dollar, a new 2 year low. In comparison to the Euro (EUR), which dropped by 0.36% to around 0.9929 US Dollars, the British Pound Sterling (GBP) dropped to a two and a half year low of 1.1656 US Dollars, and was previously down by 0.5% to around 1.16715 US Dollars.
The actions increased the US Dollar’s gains from Friday, when Jerome Hayden Powell cautioned that there would be a little pain for individuals and organizations because it would take time for the Federal Reserve System to rein in inflation. According to the senior associate for currency strategy and international economics at Commonwealth Bank of Australia (CBA), Carol Kong, the Chairman of the Federal Reserve made it plain and easy to understand that there is no compromising turn, as a few players in the market had anticipated.
The probability of a 75 Basis Points (BPS) rate increase in the upcoming Federal Reserve meeting in the month of September is now estimated by the markets to be around 64.5%. In spite of the possibility of such a significant increase at the European Central Bank‘s (ECB) policy meeting for the month of September, the Euro (EUR) has been through a rough period as a result of investors’ attention being diverted by the bloc’s energy crisis. Australia struck a new 1 month low of 0.6105 US Dollars and most recently traded 0.33% down at around 0.6113 US Dollars, while the Australian Dollar (AUD) was down 0.55% to about 0.6853 US Dollars.