USD hit a new high as Powell gets reappointed as the Fed Chair, markets increased the bet on hawkish stance

On Monday in the US, President Biden reappointed Powell as the Fed Chair and Lael Brainard as the vice-chair. The news initially buoyed Wall Street but quickly markets began to price in an earlier-than-expected rate hike in the next year. Equity indices in the US stock market eventually closed on negative notes.

However, in the FX market, The DXY hit a high of 96.239 in reaction to the news, with the EUR/USD falling as low as 1.1236. Moreover, USD also hit its new high against JPY, as investors bet that the US interest rates would rise next year and the tapering scale will be further expanded, diverging from Japan’s direction. Currently, the DXY Index is trading at 96.55, slightly down from its annual record high at 96.60.