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Currency Market Analysis

Sep 30, 2021 | Currency Market Analysis

Global Themes

USD index jumps to one-year highs on Fed, debt worries

The greenback saw a surge of interest overnight with the US dollar index breaking through key technical levels and jumping to the highest level since September last year.

The US dollar was boosted by expectations the US Federal Reserve was nearing a reduction in its bond-buying program with further commentary from Fed officials pushing US bond yield higher overnight.

Raphael Bostic, Federal Reserve of Atlanta president, said he expected the US yield curve to steepen as the Fed normalises policy.

Additionally, nervousness around the US’s debt ceiling negotiations, with an official deadline for talks to expire tonight, also saw the USD supported as investors sought safety.

The US Treasury will likely have technical authority to continue borrowing until mid-October.

USD drives moves

The USDSGD gained 0.2%.

With the moves mostly driven by the US dollar, other key markets fell.

The euro fell to six-month lows, the British pound fell to seven-month lows, while the Japanese yen fell to two-month lows.

China in focus

The Chinese economy will be the key focus today with official PMI numbers, which measure activity in the manufacturing and services sectors, due at 9.00am.

The private sector Caixin numbers are due at 9.45am.

Later, US June-quarter GDP numbers are due tonight.

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