The dollar falters with inflation looming as next test for rates


SYDNEY (Reuters) – The dollar hovered a little below year-highs on Tuesday, as cryptocurrencies hit record highs, as inflation numbers loom as the next test of the thinking of traders on the outlook for interest rates.

FILE PHOTO: A Korea Exchange Bank employee counts 100 US dollar bills during a photoshoot at the bank’s headquarters in Seoul on April 28, 2010. REUTERS / Jo Yong-Hak

Price data, expected from China and the United States on Wednesday, could also test central bankers’ promises of patience. Economists expect the numbers to show deep pressure on ex-factory prices in China, which can pass through global supply chains, and US consumer prices to soar.

Inflation expectations had pulled US real yields and the dollar a little lower overnight, especially against the New Zealand dollar, but that remains in sight of the highs reached on Friday.

The euro, which fell to a 15-month low at $ 1.15135 following strong US employment figures on Friday, held steady at $ 1.1588.

The greenback stabilized just above 113 yen. However, it had fallen around 0.7% against the kiwi overnight as traders remained cautious about the possibility that the Reserve Bank of New Zealand could hike rates by 50 basis points (bps) later. this month.

The kiwi was last stable at $ 0.7162.

“If the RBNZ wants to rise by 50 basis points, now is the time,” ANZ analysts said in a note.

“It still seems incongruous with the uncertain global environment and the cautious tone of other central banks. Yet, until we know the outcome, the markets will take risk into account. “

The risk-sensitive Australian dollar had also strengthened overnight and held most of the modest gain to trade at $ 0.7410 on Tuesday. The US dollar index was stable at 94.095, roughly in the middle of the range it held until October.

Bitcoin, which is sometimes seen as a hedge against inflation and has seen a wave of positive news, hit a record high of $ 67,700 in Asian trading, dragging the ether with it to a record high of $ 4,800.

The pound, hammered last week when the Bank of England surprised markets by keeping rates stable, rallied somewhat on Monday as global bond markets reduced some aggressive bets on an impending interest rate hike .

The British pound was at $ 1.3561 after falling to $ 1.3425 on Friday.

Ahead of the data, a slew of central bankers are expected to speak out later Tuesday, including European Central Bank President Christine Lagarde at 1:00 p.m. GMT and Fed Chairman Jerome Powell at 2:00 p.m. GMT.

Last week, alongside the surprise of the Bank of England, the Reserve Bank of Australia and the Federal Reserve pushed back forecasts of aggressive market increases and part of the advantage came from the pricing of rate.

Fed funds futures have pushed back the rate take-off from around July of next year to September or October. Standard Chartered analysts also expect a rise in the third quarter of next year, but slow growth thereafter.

“We suspect that the discussion of rate hikes will subside for some time. Central banks giving forward guidance discourage investors from adopting a pricing policy too far in advance, ”strategists Steve Englander and John Davies said in a note.

“We therefore expect Fed officials to keep repeating that rate hikes are not imminent until a move is expected in a few months.”

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Price of currency offers at 0051 GMT

Description RIC Last closure US Pct Change YTD Pct High Bid Low Bid

Previous modification


Euro dollar

$ 1.1580 $ 1.1587 -0.05% -5.22% +1.1591 +1.1581

Dollar / Yen

113.1900 113.2250 + 0.00% +9.62% +113.2800 +0.0000

Euro / yen

131.08 131.18 -0.08% + 3.28% +131.2600 +131.0700

Dollar / Switzerland

0.9138 0.9136 + 0.02% + 3.29% +0.9140 +0.9128

Pound sterling / dollar

1.3552 1.3566 -0.10% -0.80% +1.3567 +1.3553

Canadian dollar

1.2454 1.2441 + 0.11% -2.19% +1.2455 +1.2442

Australia / Dollar

0.7398 0.7423 -0.34% -3.83% +0.7423 +0.7397

New Zealand

Dollar / Dollar 0.7151 0.7168 -0.22% -0.40% +0.7165 +0.7152

All spots

Tokyo spots

Points of Europe


BOJ Tokyo Forex Market Information

Reporting by Tom Westbrook; Editing by Kenneth Maxwell


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