Connect with us
Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

Top Stories

Dollar rallies from three-week lows as U.S. data shows pick-up in inflation

Dollar rallies from three-week lows as U.S. data shows pick-up in inflation 1

By Gertrude Chavez-Dreyfuss and Saikat Chatterjee

NEW YORK/LONDON (Reuters) – The dollar rebounded from a three-week low in choppy trading on Friday, as a round of U.S. economic data suggested that inflation continued its red-hot rise in June, keeping the Federal Reserve on track to raise interest rates as aggressively as it deems necessary.

The yen fell from six-week peaks against the dollar as investors digested Friday’s data, which showed U.S. inflation perked up in June.

The personal consumption expenditures (PCE) price index jumped 1.0% last month, the largest increase since September 2005 and followed a 0.6% gain in May. In the 12 months through June, the PCE price index advanced 6.8%, the biggest gain since January 1982. The PCE price index rose 6.3% year-on-year in May.

Excluding the volatile food and energy components, the PCE price index shot up 0.6% after climbing 0.3% in May.

“The buck seems to be improved somewhat over peers because the PCE does indeed indicate that inflation has not necessarily cooled for personal items, thus giving the Fed enough room to hike as they have been telegraphing,” said Juan Perez, director of trading at Monex USA in Washington.

Another key indicator, the U.S. employment cost index (ECI), also increased. The ECI, the broadest measure of labor costs, rose 1.3% last quarter after accelerating 1.4% in the January-March period, the Labor Department said on Friday.

The index is widely viewed as one of the better gauges of labor market slack and a predictor of core inflation, as it adjusts for composition and job-quality changes. It is being closely tracked for signs of whether wage growth has peaked.

Action Economics, in its blog after the U.S. data, said the ECI was one of the metrics that alarmed the Fed and caused its pivot to a 75 basis points hike.

Friday’s reports somewhat negated data on the contraction in U.S. gross domestic product for the second quarter released the day before, which caused a pullback in rate hike expectations.

Post-data on Friday, rates futures markets have priced in a 62% chance of a 50 basis points rate hike at the Fed’s September policy meeting, down from about 70% probability before the U.S. economic reports..

The rates markets also predict that the fed funds rate will peak in February 2023. Before the day, futures were betting that top in the fed funds rate would hit this December.

In morning trading, the dollar index, a measure of its value against six major currencies, rose 0.4% to 106.60. Earlier, it slid to a three-week trough of 105.53

The euro fell 0.4% versus the dollar to $1.0155.

Against the yen, the dollar was last up 0.1% at 134.38 yen.

The yen was the primary short bet of the widening interest rate differential trade between the United States and its global peers, with net shorts on the currency, despite a recent pullback, above historical averages at $5.4 billion.

========================================================

Currency bid prices at 9:44AM (1344 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 106.5300 106.2100 +0.31% 11.360% +106.6700 +105.5300

Euro/Dollar $1.0158 $1.0196 -0.37% -10.65% +$1.0255 +$1.0147

Dollar/Yen 134.2800 134.2300 +0.06% +16.67% +134.6700 +132.5050

Euro/Yen 136.41 136.88 -0.34% +4.67% +137.3200 +135.5600

Dollar/Swiss 0.9578 0.9550 +0.32% +5.03% +0.9593 +0.9504

Sterling/Dollar $1.2080 $1.2184 -0.91% -10.73% +$1.2245 +$1.2065

Dollar/Canadian 1.2843 1.2805 +0.30% +1.59% +1.2855 +1.2790

Aussie/Dollar $0.6922 $0.6993 -1.02% -4.78% +$0.7031 +$0.6912

Euro/Swiss 0.9730 0.9737 -0.07% -6.16% +0.9753 +0.9713

Euro/Sterling 0.8406 0.8374 +0.38% +0.07% +0.8414 +0.8369

NZ $0.6228 $0.6291 -0.99% -9.00% +$0.6329 +$0.6222

Dollar/Dollar

Dollar/Norway 9.7215 9.7335 +0.01% +10.50% +9.7435 +9.6665

Euro/Norway 9.8812 9.9125 -0.32% -1.36% +9.9722 +9.8739

Dollar/Sweden 10.2099 10.1995 -0.28% +13.23% +10.2309 +10.1292

Euro/Sweden 10.3731 10.4020 -0.28% +1.36% +10.4260 +10.3728

(Reporting by Saikat Chatterjee in London and Gertrude Chavez-Dreyfuss in New York; Editing by Robert Birsel, Toby Chopra and Jonathan Oatis)

Global Banking and Finance Review Awards Nominations 2022
2022 Awards now open. Click Here to Nominate

Advertisement

Newsletters with Secrets & Analysis. Subscribe Now