Home Economy News Dollar advances as US inflation data weighs on rates outlook

Dollar advances as US inflation data weighs on rates outlook


Dollar advances as US inflation data weighs on rates outlook By Reuters

Breaking News



Published Mar 14, 2024 09:47PM ET
Updated Mar 14, 2024 10:25PM ET

© Reuters. FILE PHOTO: U.S. Dollar banknote is seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

By Ankur Banerjee

SINGAPORE (Reuters) – The dollar was firm on Friday and set to snap a three-week losing streak as hotter-than-expected U.S. inflation data stoked worries about when and by how much the Federal Reserve would start cutting interest rates this year.

Data on Thursday showed the U.S. producer price index for final demand rose 0.6% in February above the 0.3% rise economists had forecast. That came after figures on Tuesday showed consumer prices increased strongly for a second straight month in February.

The U.S. central bank is due to meet next week and while the market is not expecting any change in interest rates, investors will be closely watching for its economic projections and comments from Fed Chair Jerome Powell.

The string of sticky inflation reports has led traders to dial back their expectations, with markets now pricing in 60% chance of the Fed cutting rates in June, compared to 74% a week earlier, according to the CME FedWatch tool.

The data highlights “the risk that the last mile on taming inflation in the U.S. might not be as easy as progress made to date,” said Ryan Brandham, head of global capital markets, North America, at Validus Risk Management.

“It could give the Fed even more reason to push back the timing of any interest rate cuts in 2024.”

Traders are now pricing in 76 basis points of cuts this year, closer to the Fed’s own projection in December.

The dollar index, which measures the U.S. currency against six rivals, was 0.058% higher at 103.44, after rising 0.55% on Thursday. The index is on track for a 0.7% rise for the week, its first week of gain in four.

The euro was down 0.04% to $1.0877, while sterling was 0.10% lower at $1.2738.

The yield on 10-year Treasury notes eased 1.4 basis points to 4.284% in Asian hours, having gained as much as 10.6 basis points on Thursday. [US/]

The Japanese yen was a touch weaker at 148.49 per dollar and is on course for a nearly 1% weekly decline, its steepest weekly decline since January as the will-they-won’t-they uncertainty around the Bank of Japan’s policy movement keeps traders on edge.

Jiji news agency reported on Thursday the BOJ has started to make arrangements to end its negative interest rate policy at the March 18-19 meeting.

Preliminary results of Japan’s spring wage negotiations are due on Friday, with several of the country’s biggest companies having already agreed to meet union demands for pay increases.

“A strong shunto wage outcome is widely seen as the last piece of the puzzle that will prompt the BOJ to unwind its ultra‑easy monetary policy settings,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY).

“We consider a result that is higher than last year’s 3.58% will be supportive for a near term BOJ policy exit and JPY gains.”

In other currencies, the Australian dollar fell 0.18% to $0.657, while the New Zealand dollar fell 0.39% to $0.611.

In cryptocurrencies, bitcoin last rose 1.82% to $71,959, having touched a record high of $73,803 on Thursday. Ether last rose 1.41% to $3,895.40.

Dollar advances as US inflation data weighs on rates outlook

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning
Do not sell my personal information

© 2007-2024 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Related News