US dollar ETFs climb as risky traders turn to safety

you.S. Dollar-linked exchange-traded funds maintained momentum on Monday, with the greenback hitting a new two-decade high, as recession fears helped support the safe-haven game.

Monday, the Invesco DB US Dollar bullish (NYSEArca: UUP) increased by 0.9% and the WisdomTree Bloomberg US Dollar Bull Fund (NYSEArca:USDU) increased by 0.7%.

UUP tracks the price of the US dollar against a basket of currencies, including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. The actively managed USDU tracks the USD against a broader basket of developed and emerging market currencies, including China, India, South Korea, Switzerland, Australia, Mexico, United United, Canada, Japan and Europe.

Global markets continued to slide on the wake of stronger-than-expected US inflation data on Friday, which continued to fuel risk aversion sentiment and added to bets on even more aggressive monetary policy tightening. of the Federal Reserve to combat the unruly surge in consumer prices.

“The USD extended its gains from Friday as risk continues to dissipate across the board,” Brad Bechtel, global head of foreign exchange at Jefferies, said in a note, according to Reuters.

The U.S. dollar index, which tracks the USD against six other major foreign currencies, was trading near its highest level since December 2002.

Looking ahead, the Fed is expected to raise key interest rates by 50 basis points on Wednesday, and some market watchers are even betting on the Fed to raise rates by 75 basis points.

“A 75 basis point (bps) move is definitely going to come as a surprise to some who are holding a hard line on 50 basis points,” Bechtel said, adding that the dollar index could rise on such a move.

The Japanese yen made a surprise rise on Monday after depreciating for much of the year against the US dollar to its lowest level since 1998. The yen found some support following comments from the main bearer. -words from the Japanese government that Tokyo is monitoring the sharp fall and could “react”. appropriate” if necessary.

“The increasingly strident tone from policymakers suggests they may soon swing from one verbal intervention to another,” said Tom Learmouth, Japan economist at Capital Economics, in a note.

“We don’t believe an FX intervention would provide anything other than fleeting respite at potentially high cost,” Learmouth added.

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