Well, as we can see, the price in the weekly timeframe is also losing its support, and according to the speeches of the central bankers of the United States, the United Kingdom, Japan and the European Union about their views on inflation and the future. The economy is expecting the dollar index to continue to rise, and consequently the price of gold will fall.
Breaking News About Dollar : U.S dollar cross-currency swaps widen in sign of rising demand as Q4 nears :
LONDON/NEW YORK (Reuters) -Demand for U.S. dollars rose in currency derivatives markets on Wednesday, as the last quarter of the year approached and the greenback rose to more than 10-month highs against its peers.
Spreads on three-month euro-dollar, sterling-dollar and dollar-yen swaps were at their widest since December 2020, implying that non-U.S. borrowers are prepared to pay a premium to access dollar funds.
A trader at a bank in London said the moves were due to the fact that "three-month contracts are now capturing the year-end turn, when there is more demand for dollars".
Dollar demand typically rises among corporates and asset management firms as the end of the year approaches, with portfolio rebalancing and fund transfers requiring currencies like the euro and sterling to be converted to the U.S. currency.
The euro-dollar three-month basis swap widened to -22 basis points, from -7.5 on Tuesday, though this is well off levels of around -90 basis points touched in March 2020 when the COVID-19 crisis triggered a scramble for dollars.
The yen three-month cross-currency swap was at -25 basis points, also the widest since December last year.
Traders and analysts said, however, there was no sign of any money market stress, noting that dollar demand tends to rise in the last quarter of each year. This is often because U.S. banks, the main conduit for dollars, cut back lending to meet cash reserve rules.
"In absolute terms, even after this morning's movements we are well above the drains usually observed around year-end," said Daniel Tenengauzer, head of markets strategy at BNY Mellon (NYSE:BK) Markets. He added that the current spread for yen swaps was far narrower compared with the -35 basis points seen near the end of 2020.
The dollar index, though, has surged in recent weeks and is currently at the highest level since last November, boosted by the jump in U.S. Treasury yields amid signs the Federal Reserve could raise interest rates late next year.
Many experts reckon dollar strength will continue.
"The basis swap development reflects the impact of one of the biggest dollar positives that are supporting the currency at the moment – the drain of excess dollar liquidity that should continue to boost the currency's rate and yield advantage," said Valentin Marinov, head of G10 FX at Credit Agricole (OTC:CRARY).
He also linked the moves to expectations the U.S. Congress would approve a debt-ceiling extension, allowing the Treasury to borrow more, just as the Fed prepares to wind down bond-buying.
"The combined impact of the two developments would be to drain the global excess dollar liquidity, in a boost to the currency," Marinov added.
https://www.investing.com/news/economy/dollar-swaps-widen-in-sign-of-rising-demand-as-q4-nears-2629784
Breaking News About Dollar : U.S dollar cross-currency swaps widen in sign of rising demand as Q4 nears :
LONDON/NEW YORK (Reuters) -Demand for U.S. dollars rose in currency derivatives markets on Wednesday, as the last quarter of the year approached and the greenback rose to more than 10-month highs against its peers.
Spreads on three-month euro-dollar, sterling-dollar and dollar-yen swaps were at their widest since December 2020, implying that non-U.S. borrowers are prepared to pay a premium to access dollar funds.
A trader at a bank in London said the moves were due to the fact that "three-month contracts are now capturing the year-end turn, when there is more demand for dollars".
Dollar demand typically rises among corporates and asset management firms as the end of the year approaches, with portfolio rebalancing and fund transfers requiring currencies like the euro and sterling to be converted to the U.S. currency.
The euro-dollar three-month basis swap widened to -22 basis points, from -7.5 on Tuesday, though this is well off levels of around -90 basis points touched in March 2020 when the COVID-19 crisis triggered a scramble for dollars.
The yen three-month cross-currency swap was at -25 basis points, also the widest since December last year.
Traders and analysts said, however, there was no sign of any money market stress, noting that dollar demand tends to rise in the last quarter of each year. This is often because U.S. banks, the main conduit for dollars, cut back lending to meet cash reserve rules.
"In absolute terms, even after this morning's movements we are well above the drains usually observed around year-end," said Daniel Tenengauzer, head of markets strategy at BNY Mellon (NYSE:BK) Markets. He added that the current spread for yen swaps was far narrower compared with the -35 basis points seen near the end of 2020.
The dollar index, though, has surged in recent weeks and is currently at the highest level since last November, boosted by the jump in U.S. Treasury yields amid signs the Federal Reserve could raise interest rates late next year.
Many experts reckon dollar strength will continue.
"The basis swap development reflects the impact of one of the biggest dollar positives that are supporting the currency at the moment – the drain of excess dollar liquidity that should continue to boost the currency's rate and yield advantage," said Valentin Marinov, head of G10 FX at Credit Agricole (OTC:CRARY).
He also linked the moves to expectations the U.S. Congress would approve a debt-ceiling extension, allowing the Treasury to borrow more, just as the Fed prepares to wind down bond-buying.
"The combined impact of the two developments would be to drain the global excess dollar liquidity, in a boost to the currency," Marinov added.
https://www.investing.com/news/economy/dollar-swaps-widen-in-sign-of-rising-demand-as-q4-nears-2629784
הערה:
"The supply bottlenecks and the disruption of supply chains, which we have been experiencing for a few months ... seem to be continuing and in some sectors accelerating," Lagarde said. "I’m thinking here about shipping, cargo handling and things like that."
VERY ATTENTIVE
Global inflation has spiked in recent months on a surge in energy prices, and the production bottlenecks are pushing prices even higher, raising fears that the runup, if it lasts long enough, could seep into expectations and raise the overall profile of inflation.
Indeed, Lagarde said the ECB would be "very attentive" to these second-round effects while Bank of England Governor Andrew Bailey, another speaker at the forum, said he would keep a "very close watch" on inflation expectations.
"If this period of higher inflation, even though it ultimately is very likely to prove temporary, if it lasts long enough, will it start affecting, changing the way people think about inflation? We monitor this very carefully," Powell added.
The problem is that central banks, the main authority for controlling prices, have no influence over short-term supply disruptions, so they are likely to be bystanders, waiting for economic anomalies to self-correct without lasting damage.
"Monetary policy cannot solve supply side shocks. Monetary policy cannot produce computer chips, it cannot produce wind, it cannot produce truck drivers," Bailey said.
Still, even as policymakers called for heightened attention to inflation, all maintained their long standing view that the spike in inflation would be temporary and price rises would moderate next year, moving back to or below central bank targets.
Concerns about "sticky" inflation have fuelled a debate about the need to unwind crisis-era stimulus measures, and comments from Wednesday's panel reinforced expectations for the world's biggest central banks to move on vastly different schedules, staying out of sync for years to come.
The Fed, the BoE and the Bank of Canada have openly discussed policy tightening while central banks in such countries as South Korea, Norway and Hungary have already raised interest rates, beginning a long road to policy normalisation.
The ECB and the Bank of Japan are meanwhile likely to be the last movers, exercising extreme caution after undershooting their inflation targets for years.
The ECB even refuses to discuss tapering and already signalled its tolerance for overshooting its inflation target as it would rather move too late than too early.
This sort of patience was only reinforced by Lagarde and Bank of Japan Governor Haruhiko Kuroda, even as both provided a relatively upbeat outlook on growth, arguing that their economies could be back at their pre pandemic levels in the coming months.
VERY ATTENTIVE
Global inflation has spiked in recent months on a surge in energy prices, and the production bottlenecks are pushing prices even higher, raising fears that the runup, if it lasts long enough, could seep into expectations and raise the overall profile of inflation.
Indeed, Lagarde said the ECB would be "very attentive" to these second-round effects while Bank of England Governor Andrew Bailey, another speaker at the forum, said he would keep a "very close watch" on inflation expectations.
"If this period of higher inflation, even though it ultimately is very likely to prove temporary, if it lasts long enough, will it start affecting, changing the way people think about inflation? We monitor this very carefully," Powell added.
The problem is that central banks, the main authority for controlling prices, have no influence over short-term supply disruptions, so they are likely to be bystanders, waiting for economic anomalies to self-correct without lasting damage.
"Monetary policy cannot solve supply side shocks. Monetary policy cannot produce computer chips, it cannot produce wind, it cannot produce truck drivers," Bailey said.
Still, even as policymakers called for heightened attention to inflation, all maintained their long standing view that the spike in inflation would be temporary and price rises would moderate next year, moving back to or below central bank targets.
Concerns about "sticky" inflation have fuelled a debate about the need to unwind crisis-era stimulus measures, and comments from Wednesday's panel reinforced expectations for the world's biggest central banks to move on vastly different schedules, staying out of sync for years to come.
The Fed, the BoE and the Bank of Canada have openly discussed policy tightening while central banks in such countries as South Korea, Norway and Hungary have already raised interest rates, beginning a long road to policy normalisation.
The ECB and the Bank of Japan are meanwhile likely to be the last movers, exercising extreme caution after undershooting their inflation targets for years.
The ECB even refuses to discuss tapering and already signalled its tolerance for overshooting its inflation target as it would rather move too late than too early.
This sort of patience was only reinforced by Lagarde and Bank of Japan Governor Haruhiko Kuroda, even as both provided a relatively upbeat outlook on growth, arguing that their economies could be back at their pre pandemic levels in the coming months.
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By Balazs Koranyi and Francesco Canepa
FRANKFURT (Reuters) - Supply constraints thwarting global economic growth could still get worse, keeping inflation elevated longer, even if the current spike in prices is still likely to remain temporary, the world's top central bankers warned on Wednesday.
The disruptions to the global economy during the pandemic have upset supply chains across continents, leaving the world short of a plethora of goods and services from car parts and microchips to container vessels that transport goods across the seas.
"It's ... frustrating to see the bottlenecks and supply chain problems not getting better, in fact at the margin apparently getting a little bit worse," Federal Reserve Chair Jerome Powell told a conference.
"We see that continuing into next year probably and holding inflation up longer than we had thought," Powell told the European Central Bank's Forum on Central Banking.
Speaking alongside Powell, ECB chief Christine Lagarde voiced similar concerns, arguing that the end of these bottlenecks, once thought by economists to be just weeks away, is uncertain.