The dollar, volatile after Fed meeting; Risk currencies rise on Evergrande relief

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The dollar was trading volatile on Wednesday following the Federal Reserve’s latest monetary policy announcement, while risk-sensitive currencies such as the Australian dollar and the yuan strengthened after China Evergrande (HK: 3333 ) said he was going to pay coupons on a bond.

* The Fed cleared the way on Wednesday to cut its monthly bond purchases “soon” and signaled that interest rate hikes could come sooner than expected. Half of moneymakers expect the cost of credit to rise in 2022.

* “Tapering of quantitative easing looks very likely now in November, but this has been taken for granted and remains dependent on many criteria in the event of risks emerging, whether it be the debt limit debate, the outlook of COVID or the intervention of the Chinese real estate market,” said Steven Violin, portfolio manager at FLPutnam Investment Management Company.

* The dollar index was up 0.094%, swinging between gains and losses after the Fed’s announcement. The euro was down 0.1% at $1.1711.

* Real estate giant and Asia’s biggest junk bond issuer Evergrande said it had “settled” a payment due on Thursday through private trading, easing default concerns and possible contagion risk, while the Bank People’s Republic of China injected 90,000 million yuan of support to the banking system.

* “Being able to make the coupon payment on tomorrow’s bonds certainly raised risk-taking confidence and saw the typical follow-on reaction in risk currencies, so the loonie rose, the dollar The Australian dollar was up, the Kiwi was up, it was an understandable reaction,” said Erik Bregar, an independent currency analyst.

* Still, uncertainty remains as to whether the developer will be able to pay the coupon on its foreign dollar bonds due Thursday.

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* The Chinese yuan , which is traded abroad, strengthened against the greenback to 6.4628 per dollar.

* The Japanese yen, a haven currency, weakened 0.50% against the dollar to 109.78 per dollar, following the Bank of Japan’s decision to maintain its monetary policy.

* As for cryptocurrencies, rose 6.93% to $43,409.48, after three straight days of declines.

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