FX Rate News

The dollar headed for its first weekly decline versus major peers since the start of last month, falling back from a one-year high as traders turned their attention to when the U.S. Federal Reserve will start raising interest rates.

The dollar index, which measures the greenback against six rivals, was little changed at 94.034 on Friday. It is on track for about a 0.1% decline this week despite hitting the highest since Sept. 25 of last year at 94.563 on Tuesday.

Improved market sentiment, which has lifted global stocks, commodity prices and bond yields, is also weighing on the safe-haven dollar.

Only against the yen — another safe haven — has the dollar managed to maintain the momentum of the past five weeks, rising 0.16% on Friday and touching 113.885 yen for the first time since December of 2018.

“We end the week with risk flying,” Chris Weston, head of research at brokerage Pepperstone in Melbourne, wrote in a client note.

“Equities are going up hard, and the JPY has no place as a hedge,” because it would just drag on overall portfolio performance, Weston said.

The greenback had rallied since early September on expectations the U.S. central bank would tighten monetary policy more quickly than previously expected amid an improving economy and surging energy prices.

Minutes of the Fed’s September meeting confirmed this week that a tapering of stimulus is all but certain to start this year, although policymakers are sharply divided over inflation and what they should do about it.

Money markets are currently pricing in about 50/50 odds of a 25 basis point rate hike by July.

The dollar index is “looking a little shaky, but any slippage should prove modest” with Fed tapering now imminent, Westpac strategists wrote in a client note.

Any dips in the index should be limited to 93.70, they said.

The next major test of the U.S. economy’s health comes later on Friday with the release of retail sales figures.

The euro slipped 0.09% to $1.1588 after touching $1.1624 on Thursday for the first time since Sept. 4.

Sterling was little changed at $1.36705 following its climb to the highest since Sept. 24 at $1.3734 overnight.

The risk-sensitive Aussie dollar edged down 0.07% to $0.74105, after reaching a more than one-month high of $0.74265 in the previous session.

New Zealand’s kiwi dollar lost 0.06% to $0.7033, holding most of Thursday’s 1% surge, which took it to the highest since Sept. 24 at $0.70415.

In cryptocurrencies, bitcoin held around $57,200 after touching a five-month high of $58,550 on Thursday.

Smaller rival ether traded at around $3,780, still close to a more than one-month high of $3,825.89 reached overnight.

The dollar eased back from a one-year high versus major peers on Wednesday ahead of U.S. consumer price data that could provide additional clues on when the Federal Reserve will taper stimulus and raise interest rates.

The dollar index, which measures the greenback against six rivals, slipped 0.18% to 94.358 from Tuesday, when it touched 94.563 for the first time since late September 2020.

The U.S. currency weakened 0.13% to 113.465 yen, down from a three-year high of 113.785 yen reached in the previous session.

The euro climbed 0.18% to $1.1551, off Tuesday’s $1.1522, its lowest in nearly 15 months.

“The CPI is going to be really important, so there may be a little bit of positioning ahead of that,” said Joseph Capurso, a strategist at Commonwealth Bank of Australia in Sydney.

“The risk is for inflation to stay high, and that would bring forward market expectations for the timing and pace of rate hikes, and that will support the U.S. dollar. It’s off a little bit today but I think the dollar has more upside.”

The dollar gained on Tuesday amid rising expectations the Fed will announce a tapering of stimulus next month, with interest rate hikes following next year.

Money markets priced about a 50-50 chance of a rate increase by July, after three Fed policymakers said overnight that the U.S. economy has healed enough to begin to scale back the central bank’s asset-purchase program, including Vice Chair Richard Clarida.

Meanwhile, a surge in energy prices has fueled inflation concerns and stoked bets that the Fed may need to move faster to normalize policy than officials had projected.

“CPI is the main economic draw” on Wednesday, and “has the potential to see Fed rate hike expectations move again, one way or another,” said Ray Attrill, head of foreign exchange strategy at National Australia Bank in Sydney.

Most Fed policymakers continue to say inflationary pressures will prove transitory.

Governors Lael Brainard and Michelle Bowman are among the Fed officials due to speak later Wednesday, when the minutes of the central bank’s September meeting are also due to be released.

Sterling strengthened 0.19% to $1.36135, but remained around the middle of this month’s range.

The Aussie dollar slipped 0.19% to $0.73375, retreating from Tuesday’s one-month high at $0.7384.

Bitcoin traded around $56,200, after reaching a five-month high of $57,855.79 at the start of the week.

The dollar rose to its highest in nearly three years versus the yen on Monday as investors remained confident the U.S. Federal Reserve will announce a tapering of its massive bond-buying next month despite softer U.S. payrolls figures.

The jobs data released on Friday pushed U.S. bond yields higher, and so the yen, which is known for being particularly sensitive to yield differentials, slipped to as low as 112.84 yen per dollar in early London trading on Monday – a level last seen in December 2018.

The Japanese currency was also hurt by a slight tilt towards riskier currencies as sterling and the Australian dollar both gained slightly on the greenback, leaving the dollar’s index a touch lower at 94.137, but not far from a one-year high of 94.504 touched earlier this month.

ADVERTISING

The yen has also been weighed down by the continued crude oil rally, given Japan’s status as a net oil importer, said Joel Kruger, currency strategist at LMAX, adding that the currency is also hobbled by monetary policy divergence between the Bank of Japan and its peers, driving a widening yield differential.

“The yen has seen broad selling pressure for the 3rd straight day,” said Kruger. “This is down to a feedback loop with the Japanese stock rally, while broader sentiment has been lifted by PM Kishida’s capital gains tax comment.”

Japan’s Nikkei 225 stock market index rose for a third straight session on Monday, extending its recovery from a six-week low marked last week, as a sharp decline in the yen boosted exporters while a drop in COVID-19 infections added to economic reopening hopes.

Also underpinning stocks, Japanese Prime Minister Fumio Kishida said on Monday he will prioritize boosting wages through tax incentives, rather than imposing higher levies on capital gains and dividends to address Japan’s income gap.

U.S. currency and fixed income markets are closed on Monday for a holiday but benchmark 10-year Treasuries yield hit a four-month high of 1.617% on Friday, even after data showed the U.S. economy created the fewest jobs in nine months in September, significantly underperforming economists’ forecasts.

However, data for August was revised up sharply and the jobless rate dropped to an 18-month low, suggesting fears of labor shortage remain justified, keeping worries about inflation alive and giving the Federal Reserve justification to reduce its emergency stimulus begun last year.

“Although the headline payroll figure was weak, when you look into details, the outlook remains solid and there isn’t anything that would prevent the Fed from tapering next month,” said Shinichiro Kadota, senior FX strategist at Barclays.

The Chinese yuan was little moved by the ongoing travails of Chinese developer China Evergrande Group, even as offshore bondholders brace for news on more than $148 million in looming bond coupon payments after the company missed two coupon deadlines last month.

The offshore yuan was last at 6.4370 per dollar towards the top end of its recent range, but still short of its high of 6.422 hit in September.

The Australian dollar firmed a little, edging nearer to its highest in a month, helped by strong commodities prices and a partial reopening of Sydney, Australia’s largest city.

Concern about inflation is not limited to the United States, with supply disruptions and rising commodity prices affecting many other countries.

The British pound held firmer at $1.3634, extending its recovery from a nine-month low set late last month, on growing expectations that the Bank of England could raise interest rates to curb soaring inflation.

The Canadian dollar changed hands at C$1.2450 per U.S. dollar, having hit a two-month high of C$1.24465 thanks to surprisingly strong Canadian payrolls data and lofty oil prices.

On the other hand, the euro was soft at $1.1575, hovering a tad above its Wednesday’s low of $1.1529, its weakest level since July last year.

In cryptocurrencies, bitcoin gained 3.5% to a new five-month high of $57,092, extending gains made over the weekend, while ether also rose 5% to $3,620.

The dollar edged higher versus major peers on Friday but within a narrow range as traders awaited clues from the U.S. non-farm payrolls report on the pace of Federal Reserve policy normalization.

The U.S. Dollar Currency Index, which measures the greenback against a basket of six peers, rose 0.1% to 94.294, keeping within sight of last week’s one-year peak of 94.504.

The dollar gained 0.3% to 111.96 yen, and touched 111.975, the highest level this month, helped by higher Treasury yields, with the benchmark 10-year note hitting 1.6010% for the first time since June 4.

The euro consolidated around $1.1550, after weakening on Wednesday to a 14-month low of $1.1529.

The Federal Reserve has said it is likely to begin reducing its monthly bond purchases as soon as November and follow up with interest rate increases potentially next year, as the U.S. central bank’s turn from pandemic crisis policies gains momentum.

The non-farm payrolls data, due out later on Friday, is expected to show continued improvement in the labour market, with a consensus forecast for 500,000 jobs added in September, although estimates ranged from 250,000 to 700,000, a Reuters poll showed.

“Our expectations are for a 470k rise in employment (consensus is around 500k), which should be enough to endorse market expectations around a November tapering announcement and late-2022 rate hike, in our view,” said Francesco Pesole, G10 FX strategist at ING.

“Ultimately, a solid number should give little reason to turn any less bearish on the longer end of the curve. In FX markets, this may well translate into general support for the dollar and another bad day for the yen, the worst performing G10 currency so far (this year),” Pesole said.

Following the September Federal Open Market Committee meeting, Fed Chair Jerome Powell said the upcoming payrolls report need not be “a knock-out, great, super-strong” report to keep policy makers on track toward tapering, but it would need to be “reasonably good”.

Powell’s comment “should make markets more tolerant of a downside surprise in particular, and the balance of risks favours a positive USD reaction” to the jobs data, Adam Cole, the chief currency strategist at RBC Capital Markets, wrote in a research note.

Meanwhile, the Australian dollar slipped back 0.26% to $0.7293, following a 0.55% surge on Thursday. It earlier touched $0.7324 for a second day running, the strongest level since Sept. 16.

The Aussie has made “a decent go at breaking higher,” but the test will be whether it can stay at about $0.7315 following several failed attempts this year, Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney, wrote in a client note.

Sterling slipped 0.16% to $1.3595, holding on to most of a 0.26% gain from Thursday, when new Bank of England Chief Economist Huw Pill said inflation pressures were proving stickier than initially thought, reinforcing expectations for a rate hike by February.

The Canadian dollar was little changed at C$1.2548 per greenback after earlier strengthening to a one-month peak of C$1.2534 on the back of rising oil prices.

The dollar inched higher in choppy trade on Wednesday amid heightened nerves about the global growth outlook and as traders awaited U.S. jobs data for a clue on the timing of Federal Reserve policy tightening.

The Reserve Bank of New Zealand lifted its official cash rate for the first time in seven years, but the well-telegraphed hike was expected and the New Zealand dollar barely budged.

The kiwi was last 0.3% weaker at $0.6931 and the greenback posted similar gains elsewhere.

The euro was pinned below $1.16 and last bought $1.1590, scarcely higher than the 14-month low of $1.1563 it struck last week. The yen eased to a one-week low of 111.64 per dollar and was within range of the 18-month trough of 112.08 that it visited last Thursday.

The Australian dollar weakened 0.3% to $0.7267.

The greenback has won support as investors brace for the Federal Reserve to begin tapering asset purchases this year and lay the ground for an exit from pandemic-era interest rate settings well before central banks in Europe and Japan.

“Interest rate differentials are starting to have more of an influence on currencies than they have for quite some time,” said Kim Mundy, analyst at the Commonwealth Bank of Australia in Sydney, as an era of suppressed super-low rates starts to end.

“Now that the Fed is starting to look to taper and look to the exit, we think we might see a lift in market pricing for rate hikes which will help to support the USD,” she added.

Fed funds futures markets are priced for rate hikes to begin around November 2022, but anticipate rates topping out at just over 1% through most of 2025 even though Fed members project rates reaching 1.75% in 2024.

U.S. non-farm payrolls data due on Friday is seen as crucial to informing the Fed’s tone and timing, especially should the figures wildly impress or disappoint. Private payrolls figures, a sometimes unreliable guide, are due around 1215 GMT.

A large miss on market expectations for around 428,000 jobs to have been added in September could dampen expectations for Friday’s broader figure, which is forecast at 473,000.

Dollar in charge

Elsewhere, commodity-linked currencies drew support from oil prices, which have surged to three-year highs. The Canadian dollar sits near a one-month peak and is close to testing its 200-day moving average. Against the euro, the Canadian dollar hit a 19-month high overnight.

Sterling has recovered some of last week’s sharp selloff against the dollar but lost momentum through the Asia session and it steadied at $1.3616 and held just below Tuesday’s three-week peak on the euro .

In New Zealand a 25 basis point rate hike and familiar hawkish tone from the central bank turned out to be a non-event for traders and did little to shift the currency or expectations for further hikes in November and February.

“We’re on a path towards a series of rate hikes and the market is well priced for that,” said Jason Wong, senior market strategist at BNZ in Wellington. For the kiwi, that means “the U.S. dollar is in charge,” he said.

“That’s about the Fed, really, but globally what we’re seeing in China and the energy crunch we’re seeing in Europe all feeds into the mix and all makes markets nervous which adds to support for the dollar.

The U.S. dollar edged back toward a one-year high versus major peers on Tuesday ahead of a key payrolls report at the end of the week that could boost the case for the Federal Reserve to start tapering stimulus as soon as next month.

The safe-haven greenback was also supported by an equity sell-off that spread from Wall Street to Asia.

The risk-sensitive Australian dollar was among the biggest decliners, with the Reserve Bank of Australia reiterating it doesn’t expect to raise interest rates until 2024 after keeping policy steady, as expected.

The U.S. dollar index, which measures the currency against six rivals, rose 0.13% to 93.957, moving back toward Thursday’s peak at 94.504, its highest since late September 2020. The index had rallied as much as 2.8% since Sept. 3 as traders rushed to price in tapering this year and possible rate rises for 2022.

The dollar has also benefited from haven demand amid worries spanning the risk of global stagflation to the U.S. debt ceiling standoff.

“The dollar started the week on the back foot yesterday, failing to rise on yet another equity sell-off, and suffering from the OPEC+ decision to stick to gradual supply hikes (400k barrels/day) which sent oil prices (and oil-sensitive currencies) higher,” ING strategists said in a note.

“As highlighted in yesterday’s FX Daily, we think markets will keep buying the dips in the dollar, and this is what appears to have happened overnight, as the greenback rebounded across the board.”

Friday’s non-farm payrolls data is expected to show continued improvement in the labour market, with a forecast for 488,000 jobs to have been added in September, according to a Reuters poll.

Meanwhile, an index of Asia-Pacific equities skidded 0.92%, following a 1.3% tumble overnight for the S&P 500.

The Aussie dropped 0.34% to $0.7263, retreating further from Monday’s four-day high of $0.73045. The New Zealand dollar declined 0.34% to $0.6939, also backing away from a four-day peak at $0.6981.

The Reserve Bank of New Zealand decides policy on Wednesday, with markets priced for a quarter point rate hike.

“The RBA’s firm on-hold stance is a weight on AUD,” Commonwealth Bank of Australia strategist Joseph Capurso wrote in a report.

For the RBNZ, “with markets already pricing a rate hike cycle, the likelihood of material NZD upside is low,” he said.

The dollar gained 0.25% to 111.19 yen, while the euro slid 0.21% to $1.15965. Sterling traded flat at $1.3612.

While the consensus view is for further gains for the greenback – with speculators pushing net long bets to the highest since March 2020 – TD Securities warns that headroom may be limited.

“While the near-term USD bias leans higher, we’re wary about chasing the move at these levels,” Mark McCormick, TD’s global head of FX strategy, wrote in a report.

“There’s a lot of bad global news priced into the USD” already, and “the key for markets in the weeks ahead is to sort out the extent of the risk premium already priced in versus how these factors play out,” McCormick said.

The dollar eased from last week’s peaks on Monday as encouraging trial results for a Covid-19 pill supported risk appetite, but investors remained cautious ahead of central bank meetings in Australia and New Zealand as well as U.S. labor data this week.

The euro crept back above $1.16, and was up 0.1% at $1.1606, a recovery from last week’s 14-month low of $1.1563. The yen has also bounced from a 19-month low and was similarly up 0.1% in Asia trade at 110.92 per dollar.

Sterling, the Australian dollar and the New Zealand dollar all edged higher in early trade, extending late-week gains.

“Whether it follows through or not, I don’t know,” said Westpac analyst Imre Speizer on the phone from Christchurch.

“I’d say there could still be more downside and that would prop up the U.S. dollar and Aussie and kiwi would fall a little bit further,” he said, with sentiment in the driver’s set.

In the week ahead, the Reserve Bank of Australia meets on Tuesday and is expected to keep policy steady. Across the Tasman, a 25 basis point hike from the Reserve Bank of New Zealand on Wednesday is priced in.

And on Friday, U.S. labor data is expected to show continued improvement in the job market, with a forecast for 460,000 jobs to have been added in September — enough to keep the Federal Reserve on course to begin tapering before year’s end.

Sterling rose 0.25% to $1.3568, a third consecutive session in the green after a sharp drawdown last week when traders shrugged off hawkish central bank rhetoric to focus on a sour outlook and the risk of both higher rates and inflation.

“Investors are judging the UK by its whole suite of fundamentals factors and movements in sterling suggest that many are not liking what they are seeing,” said Rabobank strategist Jane Foley, as the currency erases early 2021 gains.

“The UK no longer has an advantage on the vaccine front…and, while PM (Boris) Johnson likes to view Brexit as ‘done’, many businesses and commentators are only just starting to evaluate its impact.”

The Australian dollar was up 0.1% to $0.7273 and kiwi was marginally firmer at $0.6952.

Economists polled by Reuters expect the cash rate on hold in Australia until at least 2024, as the RBA has been insisting it will be.

Swaps markets show a 97% probability of a rate hike in New Zealand on Wednesday and a 96% chance of another one in November.

Traders likewise think that it will take a lot to derail the Fed from its tapering track, but steadying Treasury yields along the curve points to some risk to the timing.

“The question is whether there is a number that alters the Fed’s view on tapering its bond purchases in November, and what a really weak or hot number means amid the backdrop of rising stagflation fears,” said Pepperstone’s head of research, Chris Weston.

“If U.S. treasuries find further buyers this week into Friday’s U.S. non-farm payrolls, the dollar may go on sale this week.”

The dollar traded near its highest levels of the year on Wednesday, after driving higher with U.S. yields and benefiting from investor nervousness about the Federal Reserve starting to withdraw policy support just as global growth headwinds gather.

The dollar rose broadly overnight to lift the dollar index to an 11-month high of 93.805. It was marginally below that level early in the Asia session at 92.728.

U.S. Treasury yields have surged — with benchmark 10-year rates up 25 basis points in five sessions to 1.5548% — as Fed tapering looms before the year’s end and as inflation starts to look stickier than first thought.

The Japanese yen, which is sensitive to U.S. yields as higher rates can draw flows from Japan, has fallen about 2% in five sessions and at 111.57 per dollar is not far from hitting its lowest level since February 2020.

The euro fell to a one-month low overnight and, last buying $1.1684, is also testing major support levels around its 2021 low of $1.1664 and its November 2020 low of $1.1602.

Along with the Fed’s hawkish tone, energy prices are surging and concerns are gathering about the growth outlook in China — now at risk both from a messy collapse at developer China Evergrande and rolling power outages that are hitting output.

“Compared to the unencumbered optimism at the start of the year, it is a twilight zone for markets as 2021 approaches its end,” Deutsche bank strategists said in note that upgraded forecasts on the dollar and recommended a bet against the euro.

“Persistently stagflationary dynamics – lower growth but a hawkish Fed — leave little room for a dollar downtrend,” they said.

Sterling copped a particular beating overnight as concern over the economic impact of a shortage of gas and a scramble for fuel pulled it 1.2% lower on the stronger dollar, its largest daily fall in more than a year.

The Australian and New Zealand dollars also suffered and the kiwi hit a one-month low. Central bank meetings loom next week in both countries and swaps pricing points to the Reserve Bank of New Zealand following Norges Bank and lifting rates.

“NZD/USD remains stuck around $0.7000, as the effect of the hawkish RBNZ is offset by increasing expectations of the Fed,” said Westpac analyst Imre Speizer.

The kiwi was last at $0.6947 and the Aussie at $0.7248.

Ahead on Wednesday, Japan’s ruling party votes for a new leader who will almost certainly become the country’s next prime minister.

European Central Bank (ECB) President Christine Lagarde, Fed Chair Jerome Powell, Bank of England Governor Andrew Bailey and Bank of Japan Governor Haruhiko Kuroda are panelists at an ECB forum.

The U.S. dollar rose to its highest in more than five weeks and the Japanese yen dropped versus both dollar and euro, as rising U.S. and European government bond yields made their currencies more attractive to Japanese buyers.

U.S. Treasury yields have surged since the end of last week, after the Federal Reserve said it will likely begin reducing its monthly bond purchases as soon as November and hinted that interest rate hikes may follow more.

The Japanese yen is the G10 currency most correlated with U.S. two-year and 10-year Treasury yields, MUFG currency analyst Lee Hardman said in a note to clients.

“Upward pressure on US yields should continue to provide a lift for USD/JPY in the near-term,” he said, although he also said that the yen is “deeply undervalued” which could limit the extent of the weakness.

At 0722 GMT, the U.S. dollar index was up 0.2% at 93.592, having earlier hit 93.616, its highest since August 20.

The euro was down 0.2% versus the dollar at $1.16775.

“Amidst the many cross-currents in FX markets right now – energy, Evergrande, US debt ceiling, Delta – one theme that seems to be gaining traction is that the market lies on the cusp of re-assessing the path for the Fed tightening cycle,” ING strategists wrote in a note to clients.

“A big move higher in the short-end is the key reason why we are bullish on the dollar, particularly from 2Q next year, but we will closely monitor and re-assess whether that move needs to come earlier – largely a function of timing the take-off in short-end rates.”

The yen – which is seen as a safe haven currency – was down around 0.3% against the dollar, with the pair changing hands at 111.355. Earlier in the session it hit 111.430, the yen’s weakest in almost three months.

ING strategists said the yen’s weakness was also due to Japan’s role as a large energy importer. Oil prices climbed for a sixth day on Tuesday and prices of liquefied natural gas (LNG) and coal also rose.

Minutes from the Bank of Japan’s July meeting showed that some central bank policymakers warned of the risk of a delay in the country’s economic recovery.

The Australian dollar, which is seen as a liquid proxy for risk appetite, was down 0.2% at $0.7267.

The British pound was down 0.2% at $1.36785. The currency jumped last week after a hawkish tone by the Bank of England, but analysts struck a cautious note on the currency as Britain struggled with supply chain chaos.

“The longer the supply bottlenecks persist, the more endangered the economic recovery will be and the less likely a significant tightening of monetary policy will become,” Commerzbank FX analyst Esther Reichelt said in a client note.

Currency traders are waiting for central bank speakers, including ECB Christine Lagarde at 1200 GMT and U.S. Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen, who will appear before U.S. lawmakers later in the session.

Market participants are also watching U.S. politics, after the Senate failed to advance a measure to suspend the federal debt ceiling and avoid a partial government shutdown.

China’s central bank said it would protect consumers exposed to the housing market on Monday and injected more cash into the banking system as the Shenzhen government began investigating the wealth management unit of ailing developer Evergrande.

The dollar fell across the board on Thursday as improved risk sentiment in global financial markets wiped out its gains in the previous session after the U.S. Federal Reserve flagged plans to dial back its stimulus this year.

Investors’ risk appetite improved after Beijing injected fresh cash into its financial system ahead of an $83.5 million bond coupon by embattled property giant Evergrande, at risk of becoming one of the world’s largest-ever corporate defaults.

Worries about Evergrande’s payment obligations and what systemic risks to China’s financial system the property giant’s difficulties pose have weighed on global financial risk sentiment in recent sessions.

“Commodity currencies are broadly higher while havens are weaker, leaving the USD trading generally lower after a firm close following the FOMC (Federal Open Market Committee),” Shaun Osborne, chief currency strategist at Scotiabank, said in a note.

The U.S. Dollar Currency Index, which measures the greenback against a basket of six rivals, was 0.5% lower at 93.037. The index, which had risen 0.25% on Wednesday, was on pace for its biggest daily percentage drop in a month but remains close to the near 10-month high touched in late August.

The offshore Chinese yuan strengthened versus the greenback at 6.4599 per dollar.

The dollar found little support from data that showed the number of Americans filing new claims for jobless benefits unexpectedly rose last week amid a surge in California.

Thursday’s improved mood boosted risk-sensitive commodity currencies, with the Australian dollar rising 0.9% and the New Zealand dollar up 1.0%.

The improved risk-appetite was reflected in Wall Street’s major equity indexes, with the S&P 500 on track for a gain of more than 1% and its largest two-day percentage gain since late July.

On Wednesday, the Federal Reserve said it will likely begin reducing its monthly bond purchases as soon as November and signaled interest rate increases may follow more quickly than expected.

While positive for the dollar, the boost from the Fed’s announcement was undercut by hawkish messages from several central banks in Europe, and as Norway became the first developed nation to raise rates.

Norway’s crown jumped to a 3-1/2 month high versus the euro on Thursday after the central bank raised its benchmark interest rate and said more hikes will follow in the coming months.

Sterling extended its rise on Thursday after the Bank of England said two of its policymakers had voted for an early end to pandemic-era government bond buying and markets brought forward their expectations for an interest rate rise to March.

In emerging markets, the Turkish lira plummeted to a record low after a surprise interest rate cut of 100 basis points to 18% that came despite inflation hitting 19.25% last month

Meanwhile, bitcoin extended its recovery from a sharp fall earlier this week, rising 2.42% to a 3-day high of $44,642.78.