The dollar was lower in London on Friday morning, settling for its biggest weekly loss in eight months. Investors reduced their long positions as they bet that several US interest rate hikes in 2022 are already priced in.
The US Dollar Index fell 0.07 percent to 94.172 index points against a basket of currencies.
The index is down roughly 0.9 percent for the week and is on track for its biggest weekly percentage decline since May 2021, bringing an end to a six-month rally.
The US dollar suffered a setback in the second week of January. It has been difficult to avert a sharp dollar sell-off as a result of remarks made by Federal Reserve policy makers during Capitol Hill speeches and congressional testimony.
The release of US dollar selling began earlier this week with the testimony of Fed Chair Jerome Powell at his nomination hearing. The DXY index fell another leg on Tuesday as a result of the December US consumer price index (CPI).
Despite this, the US dollar has settled near critical support in the aftermath of incoming Fed Vice Chair Lael Brainard’s testimony.
Brainard’s remarks were very ‘goldilocks’ in nature, similar to those of Fed Chairman Powell: optimistic about the pace of labor market recovery but concerned about persistently high prices.
“We are experiencing the strongest growth rebound and the lowest unemployment rate in five decades,” Brainard said, adding that “inflation is too high.”
Investors appear to be signaling that the combination of ending quantitative easing, hiking rates four times, and instituting quantitative tightening all within nine months of one another is too aggressive and precludes further hikes.
This article was originally published on Naija News