A hand holds a series of fan-shaped US dollar banknotes.

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The dollar held near a one-month high against a basket of currencies on Wednesday as investors tried to determine if the Federal Reserve could change the language of its stimulus measures following a recent surge of US inflation.

The dollar index stood at 90.528, after hitting a one-month high of 90.677 on Tuesday, despite mixed US economic data.

Retail sales in the United States fell more than expected in May, but April sales were revised sharply upward and are well above their pre-pandemic level.

With spending shifted to services from goods, as vaccinations allow Americans to travel and engage in other activities, the data reinforced the perception of a strong economic recovery.

Separate data showed wholesale price inflation accelerated to 6.6%, the biggest increase since November 2010.

The Federal Reserve is generally expected to recognize early conversations among its policymakers about when and how quickly to scale back the massive bond buying program launched in 2020 when it concludes a policy meeting later in. the day.

Still, most investors believe the Fed will refrain from any suspicion of starting to gradually reduce its stimulus measures in the near future.

“The Fed said it was going to be reactionary in the face of the data,… and it said it wanted to see prolonged inflationary conditions before committing to reduce or increase,” said Bart Wakabayashi, branch manager from Tokyo. at the State Street Bank.

Wakabayashi said the dollar is expected to recover if the Fed hints that the cut will be advanced or that rate hikes will be considered sooner, but added, “I think they’re going to stick to the same slogan, and it will probably end up being a non-event. “

Some market participants have also noted that the dollar may rise by default as other major currencies appear to be losing momentum.

“We should note that the US dollar is strengthening now even as the yield on US debt has fallen below 1.5%,” said Makoto Noji, chief foreign exchange strategist at SMBC Nikko Securities.

“Today’s forex market suggests that there is a lot of potential pressure to raise the dollar, should there be any surprises from the Fed.”

The euro stood at $ 1.2126, little changed that day but struggling to recover from its fall last week after the European Central Bank pledged to maintain stimulus during the summer.

The yen was flat at 110.08 yen to the dollar, near its two-month low of 110.325 hit earlier this month, with the Bank of Japan due to extend some of its pandemic relief measures this week. .

The British pound, which has performed well so far this year, hit a one-month low of $ 1.4035 on Tuesday despite stronger-than-expected employment data. It was $ 1.4085 for the last time.

The number of employees on UK business payrolls rose by a record amount in May, while wage growth marked its biggest increase since 2007 in April, although statisticians have warned this was skewed by comparisons with depressed salaries a year ago and greater job losses among low-paid staff. .

While the UK employment recovery is expected to continue with the economy reopening, the rapid spread of the highly contagious Delta variant of the novel coronavirus, which has forced Prime Minister Boris Johnson to delay his lifting plans lock, is considered a risk.

The Australian dollar lacked traction after the country’s central bank on Tuesday signaled its willingness to expand its bond buying program next month.

The currency changed hands at $ 0.7685, not far from a seven-week low of $ 0.7646 reached earlier this month.

In crypto markets, bitcoin was trading at $ 40,305, after peaking nearly a month at $ 41,341 on Tuesday, aided by the promise of a new investment from major backer MicroStrategy and an optimistic tweet from Tesla boss Elon Musk.

Ether had less momentum, at $ 2,561.

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