Dollar gains as US inflation data weighs on interest rate outlook
ExpandingWritten by Uncle Banerjee
SINGAPORE (Reuters) – The dollar held firm on Friday as better-than-expected U.S. inflation data raised concerns about when and how much the Federal Reserve will cut interest rates this year. , appeared to be ending a three-week losing streak.
Data on Thursday showed the U.S. final demand producer price index rose 0.6% in February, beating economists’ expectations for a 0.3% rise. This came after Tuesday’s data showed consumer prices rose sharply in February for the second month in a row.
The U.S. central bank is scheduled to meet next week, and while markets aren’t expecting any interest rate changes, investors are keeping an eye on the central bank’s economic forecast and comments from Fed Chair Jerome Powell.
Traders are lowering their expectations after a series of volatile inflation reports, with markets pricing in a 60% chance of the Fed cutting rates in June, compared to 74% a week ago, according to the CME FedWatch tool. was.
Ryan Brandom, head of global capital markets in North America at Validus Risk Management, said the data highlights “the risk that the last mile of slowing U.S. inflation may not be as easy as progress has been.” He said he is doing so.
“This could give the Fed even more reason to delay rate cuts in 2024.”
Traders are currently pricing in a rate cut of 76 basis points this year, close to the Fed’s own forecast in December.
The dollar index, which measures the value of the U.S. currency against six rival currencies, rose 0.058% to 103.44, after rising 0.55% on Thursday. The index is expected to rise 0.7% for the week, the first increase in four weeks.
The euro fell 0.04% to $1.0877, and the pound sterling fell 0.10% to $1.2738.
The 10-year US Treasury yield fell 1.4 basis points to 4.284% in Asian time, having risen as much as 10.6 basis points on Thursday. [US/]
The Japanese yen was slightly weaker at 148.49 yen to the dollar, on track for a nearly 1% weekly decline, its biggest weekly decline since January as uncertainty over the Bank of Japan’s policy moves held back traders. This was a significant decline. At the edge.
Jiji Press reported on Thursday that the Bank of Japan began making adjustments toward lifting its negative interest rate policy at its March 18-19 meeting.
Preliminary results of Japan’s spring wage negotiations are expected to be announced on Friday, with some of Japan’s biggest companies already agreeing to meet union demands for higher wages.
“The strong spring wage results are widely seen as the final piece of the puzzle to prompt the Bank of Japan to lift its ultra-easy monetary policy settings,” said Carol Conn, currency strategist at Commonwealth Bank of Australia. Ta.
“We believe a higher result than last year’s 3.58% will support a short-term BOJ policy exit and yen appreciation.”
Among other currencies, the Australian dollar fell 0.18% to $0.657, and the New Zealand dollar fell 0.39% to $0.611.
Among cryptocurrencies, Bitcoin was last up 1.82% to $71,959, hitting an all-time high of $73,803 on Thursday. Ether was last up 1.41% at $3,895.40.
(Reporting by Ankur Banerjee in Singapore; Editing by Lincoln Feast.)
