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Currency Market Analysis

Jun 17, 2021 | Currency Market Analysis

Global Themes

USDSGD at two-month highs as Fed looks to 2023 hike

The USD jumped overnight after the US Federal Reserve brought forward its potential first rate hike to 2023.

The Fed upgraded GDP forecasts for 2021 from 6.5% to 7.0% saying that the quick vaccine rollout has boosted confidence and activity.

However, all short-term programs, which will usually have a greater impact on USD valuations, remain in place, with the Fed’s USD120bln money-printing scheme, most importantly, continuing.

The Fed’s view on reducing this program, the widely discussed “taper” out of bond buying, still seems some time away, with Fed chair Jerome Powell saying board members have started “talking about talking about” reducing this program.

The focus now shifts to the Fed’s Jackson Hole symposium in late August.

USD jumps

The USD jumped on the news with the biggest gains seen versus the euro, Australian and New Zealand dollars.

The USDSGD closed at the highest level since 14 April.

Euro CPI due

Today, the focus remains on central bank policy, with a key speech Reserve Bank of Australia governor Philip Lowe.

In Europe tonight, the Swiss National Bank meets, while Eurozone inflation is also released.

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