• Sun. May 28th, 2023

US Dollar Rises After Inflation Data Release, Boosting Rate Hike Expectations

The U.S. dollar rose on Friday after data showed inflation rose in March, albeit at a slower pace, keeping the Federal Reserve firmly on track to raise interest rates at the meeting monetary policy next week.

The yen, meanwhile, fell across the board, after the Bank of Japan said it would keep interest rates ultra-low as expected, and unanimously decided not to change its policy. yield curve control (YCC).

The Japanese currency plunged to its lowest level since September 2008 against the euro, and to its weakest level in seven weeks against the dollar.

The euro last appreciated 1.5% against the yen to 150. Over the week, the single European currency rose 1.8%.

The dollar, on the other hand, last traded up 1.7% to 136.235 yen, posting a weekly gain of 1.6%, its best weekly performance since late February.

The dollar index, a measure of the value of the greenback against the six major currencies, rose 0.2% to 101.65.

Data on Friday showed the Personal Consumption Expenditure (PCE) price index edged up 0.1% in March after rising 0.3% in February. In the 12 months to March, the PCE price index rose 4.2% after rising 5.1% in February.

Excluding the volatile food and energy components, the PCE price index edged up 0.3% after rising at the same pace in February. The so-called core PCE price index gained 4.6% on an annual basis in March after rising 4.7% in February. The Fed tracks PCE price indexes for its 2% inflation target.

“You probably need a much bigger slowdown in the growth rate for the Fed to be confident that it’s done its job; it’s not there yet,” said Joseph Lavorgna, chief US economist at SMBC Nikko Securities in New York. “It doesn’t change the outlook (for policymakers next week).”

Following the inflation data, the rate futures market priced a 90% chance of a 25 basis point hike next week.

A separate report on Friday showing the University of Michigan’s final consumer sentiment reading of 63.5 in April, down from a three-month low of 62 in March, added to the dollar gains. The one-year outlook for US consumer inflation was 4.6 this month from 3.6 in March, further supporting rate hike expectations, also boosting the dollar.

The euro, meanwhile, slipped 0.1% against the dollar to $1.1017.

Economic data painted a mixed picture for growth and inflation in the eurozone, increasing uncertainty about the scale of the interest rate hike expected by the European Central Bank next week.

Preliminary data showed euro zone gross domestic product rose 0.1% in the first quarter, below a Reuters poll’s expectations of 0.2%.

Europe’s single currency had fallen much earlier in the session, but pared its losses as investors sold the yen against the euro. This had repercussions on the euro/dollar cross.

“We believe the balance of probabilities is gradually shifting in favor of the dollar,” wrote Jonathan Petersen, senior market economist at Capital Economics in a research note.

“The ‘golden loop’ regime of stronger activity data outside the US appears to be fading, and we expect the dollar to benefit from safe-haven demand once global growth begins to deteriorate further. noticeably in the coming months.”

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Currency rates at 3:26 p.m. (1926 GMT)

Description RIC Last US Close Pct Change YTD Pct Highest Bid Lowest Bid

Previous change


Dollar index 101.6400 101.4500 +0.20% -1.788% +102.1700 +101.4200

Euro/Dollar $1.1018 $1.1029 -0.10% +2.83% +$1.1045 +$1.0963

Dollar/Yen 136.2350 134.0100 +1.66% +3.91% +136.5600 +133.3600

Euro/Yen 150.00 147.77 +1.51% +6.91% +150.4300 +147.2300

Dollar/Swiss 0.8936 0.8944 -0.07% -3.34% +0.8975 +0.8896

Pound sterling/dollar $1.2563 $1.2500 +0.50% +3.88% +$1.2584 +$1.2447

Dollar/Canadian 1.3547 1.3591 -0.32% -0.01% +1.3668 +1.3536

Aussie/Dollar $0.6615 $0.6630 -0.22% -2.95% +$0.6642 +$0.6573

Euro/Switzerland 0.9846 0.9862 -0.16% -0.50% +0.9868 +0.9816

Euro/pound sterling 0.8769 0.8824 -0.62% -0.85% +0.8839 +0.8768

New Zealand $0.6184 $0.6148 +0.59% -2.61% +$0.6187 +$0.6124


Dollar/Norway 10.6650 10.6210 +0.44% +8.70% +10.7690 +10.6290

Euro/Norway 11.7497 11.7106 +0.33% +11.97% +11.8338 +11.6981

Dollar/Sweden 10.2563 10.2857 -0.46% -1.46% +10.3522 +10.2405

Euro/Sweden 11.3011 11.3530 -0.46% +1.36% +11.3720 +11.3010

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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)

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