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

The dollar was headed for its best week in seven months on Friday, driven higher by a flight from risky assets and markets pricing a year ahead of aggressive hikes in U.S. interest rates.

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.

Gains paused in the Asia session, leaving other major currencies to nurse losses. The euro EUR=EBS crept marginally higher to $1.1152 from Thursday's 20-month low of $1.1131.

The yen JPY=EBS hovered at 115.43 to the dollar and the Australian and New Zealand dollars languished - the kiwi NZD=D3 dipping slightly to a fresh 15-month low of $0.6570.

For the week so far, the dollar has gained about 1.7% on the euro, nearly 2% 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 97.139. "Don't fight the Fed. Don't fight the market," said OCBC Bank analyst Terence Wu in Singapore.

"The dollar may well extend towards the next target at the 97.70/00 zone on the DXY Index, beyond which the technical resistances are scarce until close to 100.00," he said.

"The Antipodeans have led losses against the dollar year-to-date, expect the euro and yen to catch up. Stay negative on the New Zealand dollar, euro and yen in the coming sessions."

The yuan also copped a kicking on Thursday, its worst session in seven months, as softening industrial profit growth in China bolstered the case for monetary easing there.

That compares with a Fed funds futures 0#FF: market pricing in as many as five U.S. hikes this year with some analysts forecasting six.

Ahead on Friday are growth figures for Germany and France, and sentiment surveys in the United States. Beyond that looms a week of central bank meetings in Britain, Europe and Australia.

Sterling GBP=D3 was pushed to a one-month low of $1.3360 on Thursday but has bounced to $1.3409 as traders await the Bank of England's meeting next week. Rates markets have priced a 90% chance of a hike. BOEWATCH

After the dust settles on the rates outlook, some analysts think the dollar then starts to run out of steam.

"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."

	======================================================== 
	Currency bid prices at 0622 GMT 

 Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	 High Bid	Low Bid 
											  Previous				   Change				  
											  Session											
 Euro/Dollar	   EUR=EBS	$1.1154		$1.1144	 +0.09%		 -1.89%	  +1.1156	 +1.1138 
 Dollar/Yen		JPY=EBS	115.3550	   115.3600	+0.12%		 +0.42%	  +115.5100   +115.2750 
 Euro/Yen		 																			 
 Dollar/Swiss	  CHF=EBS	0.9297		 0.9310	  -0.10%		 +1.96%	  +0.9316	 +0.9299 
 Sterling/Dollar   GBP=D3	 1.3413		 1.3380	  +0.26%		 -0.81%	  +1.3415	 +1.3381 
 Dollar/Canadian   CAD=D3	 1.2717		 1.2740	  -0.16%		 +0.60%	  +1.2748	 +1.2713 
 Aussie/Dollar	 AUD=D3	 0.7040		 0.7034	  +0.06%		 -3.18%	  +0.7046	 +0.7023 
 NZ				NZD=D3	 0.6584		 0.6582	  +0.05%		 -3.79%	  +0.6589	 +0.6570 
 Dollar/Dollar																				   

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

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

	^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>