The dollar dipped on Monday but stayed around a six-week high on Friday as a slew of economic data boosted market expectations of Federal Reserve monetary tightening.
At 103.81, the US Dollar Index lost 0.2%. Since September, it has grown approximately 1.8% monthly. However, Friday’s high was 104.67.
Monday’s US market closure for Presidents’ Day is likely to affect liquidity.
Statistics from the world’s largest economy revealed a tight labor market, sticky consumer prices, and robust retail sales. Plus rising producer costs. Thereby increasing Americans hope..
Interest rates will increase unless the central bank controls inflation. Analysts predict the dollar’s advance to end as markets expect the federal funds rate to peak below 5.3% by July.
“The dollar has moved quite a bit with the rate review this month. The issue is how long that will persist,” said ING global head of markets Chris Turner.
I would say much of what we term a flat dollar surge has been observed. The US currency rose as Fed policymakers warned that interest rates would need to increase to curb inflation.
Swedish krona fared better after core inflation climbed in January.
In the latest Central Bank meeting minutes, officials supported more rate rises to contain inflation.
The dollar declined 1% to 10.3405, while the euro sank 1.1% to 11.05 kronor versus the Swedish krona.
Nordea chief economist Torbjörn Isaksson expects the Riksbank to increase 50 basis points in April and 25 in June.
“He should support the crown, and today we see him stronger” Isaksson said, adding that the ECB and Fed were also optimistic.
Two ECB policymakers said on Friday that euro-zone interest rates could rise to some extent and push up market prices for the ECB’s top rate.
The euro was slightly changed against the dollar at $1.0690, just above Friday’s six-week low of $1.06125.
“We believe that U.S. the disinflation process will see another phase in the second quarter.
While inflation in Europe is likely to remain tougher,” ING’s Turner said he could support the euro in the first half of the year.
The dollar fell 0.2% against the yen to 133.94. It hit a two-month high of 135.12 yen on Friday. However, the Australian $ was up 0.6% to $0.6918 ahead of the release of the latest minutes from the Reserve Bank of Australia’s monetary policy meeting on Tuesday. Kiwi rose 0.1% to $0.6249, ahead of the Reserve Bank of New Zealand’s decision on Wednesday that the bank should cut its interest rate by half a point.
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