In Asia on Wednesday morning, the dollar was rising, slowly approaching its best level in over two years. The dollar rose overnight on hawkish remarks from US Federal Reserve governors, while the euro fell as the West considers more sanctions against Russia.
By 1:22 a.m. ET, the US Dollar Index, which measures the value of the dollar against a basket of other currencies, had risen b percent to 99.580. (5:22 AM GMT).
The USD/JPY exchange rate increased by 0.24 percent to 123.9.
The Australian dollar rose 0.04 percent to 0.7582, while the New Zealand dollar fell 0.04 percent to 0.6944.
The USD/CNY exchange rate rose 0.04 percent to 6.3665, while the GBP/USD exchange rate rose 0.05 percent to 1.3075.
On Wednesday, the dollar rose to its highest level in nearly two years after a spike overnight in response to further hawkish remarks from a Federal Reserve member, while the euro was harmed by the threat of new Western sanctions against Russia.
The dollar index, which compares the greenback to six other currencies, climbed to a high of 99.640 in early trade, its highest level since May 2020, before settling slightly lower.
On Tuesday, the index rose 0.5 percent after Federal Reserve Governor Lael Brainard said she anticipates a mix of interest rate hikes and a rapid balance sheet runoff to bring U.S. monetary policy to a "more neutral posture" later this year, with more tightening as needed.
Brainard is known for being a dovish policymaker.
Ray Attrill, global head of FX strategy at National Bank of Australia, stated, "Brainard's statements are the proximate cause of the back up in yields and the firmer dollar that we've had."
The dollar rose to its highest level in nearly two years on Tuesday, bolstered by hawkish remarks from Federal Reserve members who advocated for a rapid decrease in the central bank's bloated balance sheet, with one of them suggesting openness to half-point rate hikes.
The dollar index climbed to 99.526, its highest level since late May 2020. It was last trading at 99.498, up 0.5 percent.
Fed Governor Lael Brainard, who is generally a dovish policymaker, said on Tuesday that she expected gradual interest rate hikes and quick reductions in the Fed's almost $9 trillion balance sheet to bring monetary policy to a "more neutral posture" later this year. As needed, more tightening will be done.
In remarks on Tuesday, Kansas City Fed President Esther George, a voting member of the Federal Open Market Committee, also advocated a rapid run-off of the Fed balance sheet, saying that "50 basis points will be an option that we'll have to explore."
"The dollar's movements today were primarily due to Brainard's hawkish remarks. She was adamant about two things: "According to Erik Nelson, a macro strategist at Wells Fargo Securities in New York (NYSE:WFC).
This is a brief update on the dollar market; hopefully, traders can gain an understanding of the market and benefit from it.