Dollar Is Close to Erasing 2023 Losses on Further US Hike Bets
Another week of gains for the dollar is putting the US currency close to erasing its 2023 losses amid growing bets for more Federal Reserve rate hikes.
The Bloomberg Dollar Spot Index is now poised for its third weekly gain — the longest winning streak since September. Real money has bought the currency this week — mainly against the euro and the yen, according to Europe-based traders familiar with the transactions who asked not to be identified because they aren’t authorized to speak publicly.
Stronger US economic data and hawkish comments from Fed officials have led investors to rethink the outlook for rates, boosting the appeal of the dollar. Traders are now expecting around 68 basis points of additional hikes by June, from 59 at the end of last week, according to data compiled by Bloomberg.
“Strong US cyclical and inflation data have investors finally coming around to the idea the Fed is correct and that rates will have to go significantly higher,” said David Forrester, senior FX strategist at Credit Agricole CIB in Singapore.
The dollar index was little changed Friday, still gaining 0.5% in the week.