Dollar pushes higher on Fed rate hike expectations, euro pressured by Draghi

Monetary policy between the Federal Reserve and the European Central Bank are growing ever wider, causing the euro to fall and the U.S. dollar to strengthen.

The U.S. dollar and the yield on the benchmark U.S. two-year Treasury note rose 0.08 percentage point, or 9.4 per cent last week. Minutes from the Federal Reserve’s October meeting that bolstered expectations of a December rate rise helped push the yield higher.

The minutes of the Fed’s October meeting showed that most member on the rate setting Federal Open Market Committee think conditions for a rise in interest rates “could well be met” by December. Expectations for a rate rise have been in flux since the summer when concerns about an economic slowdown in emerging markets, especially China roiled global markets.

Meanwhile, the euro fell after European Central Bank president Mario Draghi delivered a predictably dovish set of remarks on Friday which raised market expectations for more stimulus measures to be launched at the ECB meeting in December.

Draghi showed concern about low core inflation in the Eurozone, a measure which excludes food and energy costs and is seen as more representative of lower demand.

ECB policymakers also think lower oil prices may affect demand and be a bellwether for a vicious bout of deflation. They are worried about the length of time inflation has been below target.

The post Dollar pushes higher on Fed rate hike expectations, euro pressured by Draghi appeared first on FXTM Blog.

Source:: Dollar pushes higher on Fed rate hike expectations, euro pressured by Draghi