Dollar hovers near 2-decade high as CPI keeps aggressive U.S. rate hikes likely

On March 18, 2022, a man counts US dollar bills at a currency exchange office in Beirut, Lebanon.Reuters / Mohamed Azakia / File

Tokyo, May 12 (Reuters)-The US dollar remained high for nearly 20 years on Wednesday after US inflation fell below market expectations, and the Fed aggressively tightened its policies.

The dollar index, which measures greenbacks for the six major peers, fell about 0.1% on Thursday to 103.92, but was still close to the 104.19 level reached at the beginning of the week for the first time since late 2002.

The consumer price index rose 8.3% annually in April, down from 8.5% in March, but above economists’ estimates of 8.1%. read more

Data suggest that inflation may have peaked, but it is unlikely that it will cool rapidly and upset the Fed’s current monetary policy plans.

According to the CME FedWatch Tool, the market is fully priced with a rise of at least 0.5 percentage points in policy rates in each of the following two federal government decisions on June 15th and July 27th.

“The stronger-than-expected US inflation rate has raised concerns about the need for the Fed to accelerate its policy tightening path,” said Rodrigo Catril, senior currency strategist at the National Australia Bank.

The May consumer price index was released five days before the June FRB meeting, another “shocker” raised 75 basis points, and then “strong potential,” he said.

The euro rose 0.14% to $ 1.0526, a slight drop from the $ 1.04695 low at the end of last month for more than five years. The single currency rose as the European Central Bank settled expectations in July to raise the policy rate for the first time in more than a decade. read more

The yen continued to gain support from the long-term Treasury yield easing from a multi-year peak above 3.2% at the beginning of the week.

In Tokyo trading on Thursday, 10-year Treasury yields retreated to a nearly two-week low of 2.862%, raising the Japanese currency by about 0.1% per dollar to 129.835, from a 20+ year low of 131.35 on Monday. Further separated. ..

According to the Times, the British pound has been sluggish as Britain’s Brexit heading has returned, and the Attorney General of England and Wales has said it is within legal rights to abandon most of the Northern Ireland Protocol. Advised the government. read more

Sterling fell to $ 1.2230 on Thursday for the first time in almost two years.

In cryptocurrencies, Bitcoin tried to regain $ 30,000 after falling below that level for the first time since July on Wednesday. It rose to $ 30,090.70 on Friday and finally leveled off at around $ 29,185. It fell to $ 27,757.77 in the last session.

Report by Kevin Buckland; edited by Simon Cameron-Moore

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