News: FOREX-Dollar set for sparkling week as hike expectations surge

The dollar was headed for its best week in seven months on Friday after breaking through key levels against the euro as traders priced in a year of aggressive U.S. interest rate hikes.

Federal Reserve chair Jerome Powell unleashed bets on five or more hikes this year after he left the door open on Wednesday to raising rates faster than in previous cycles.

Data showing the best annual U.S. growth in nearly four decades didn't hurt either.

Overnight the euro EUR=EBS fell almost 0.9% to a 20-month low of $1.1131, the yen JPY=EBS fell 0.6% and the Australian and New Zealand dollars dropped more than 1%.

For the week so far, the dollar has gained 1.7% on the euro, 2% or more on the Antipodeans and the U.S. dollar index =USD has shot above 97 for the first time since July 2020. It last stood at 97.250.

"So much for all those analysts rushing to conclude that the dollar rally was done, following the early-year divergence between (rising) U.S. interest rates and the (falling) dollar," said National Australia Bank's head of FX strategy, Ray Attrill.

The greenback also leapt against the yuan on Thursday - its best session in seven months - as softening industrial profit growth in China bolstered the case for monetary easing there.

Fed funds futures 0#FF: have moved to price in as many as five U.S. hikes this year with some analysts forecasting six.

Moves were modest in early Asia trade, leaving the yen at 115.40 per dollar and the Aussie AUD=D3 clinging on at $0.7029. The Aussie's next support is December's low of $0.6994.

The New Zealand dollar NZD=D3 was kept under pressure and edged to a fresh 15-month low of $0.6570.

Sterling GBP=D3 was pushed to a one-month low of $1.3360 overnight and hovered at $1.3385 as traders turn their focus to a Bank of England meeting next week. Rates markets have priced a 90% chance of a hike. BOEWATCH

The European Central Bank and the Reserve Bank of Australia also meet next week and some analysts see the dollar's surge starting to lose steam as economies and central banks around the world emerge from the pandemic during the year.

"The dollar is on cycle highs and has further to go as rate differentials and increased levels of market volatility provide support. But this is the last stage of the move," said Societe Generale strategist Kit Juckes.

"As the global economy emerges from the worst of the COVID pandemic this year, the market focus will shift to monetary policy normalisation and growth outside the U.S. and the best currency returns in the second half of this year are likely to come from outside the major developed economies."

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	Currency bid prices at 0105 GMT 

 Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	 High Bid	Low Bid 
											  Previous				   Change				  
											  Session											
 Euro/Dollar	   EUR=EBS	$1.1146		$1.1144	 +0.01%		 -1.96%	  +1.1148	 +1.1138 
 Dollar/Yen		JPY=EBS	115.4550	   115.3600	-0.07%		 +0.22%	  +115.4650   +115.2750 
 Euro/Yen		 																			 
 Dollar/Swiss	  CHF=EBS	0.9311		 0.9310	  +0.02%		 +2.08%	  +0.9316	 +0.9309 
 Sterling/Dollar   GBP=D3	 1.3392		 1.3380	  +0.10%		 -0.96%	  +1.3394	 +1.3381 
 Dollar/Canadian   CAD=D3	 1.2730		 1.2740	  -0.08%		 +0.68%	  +1.2748	 +1.2728 
 Aussie/Dollar	 AUD=D3	 0.7038		 0.7034	  +0.07%		 -3.17%	  +0.7040	 +0.7028 
 NZ				NZD=D3	 0.6578		 0.6582	  -0.10%		 -3.94%	  +0.6588	 +0.6570 
 Dollar/Dollar																				   

All spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX

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World FX rates	https://tmsnrt.rs/2RBWI5E 

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