He dollar hit its highest level since November on Thursday, after the inflation to the consumer in USA was higher than expected, frustrating expectations of an interest rate cut by the Federal Reserve (Fed) in June.
He dollar index, which compares the greenback with six other currencies, rose 0.1% to 105.26 units, its highest level since November. Investors, who had expected a rate cut in June, now see it as more likely that the easing cycle will begin in September.
The minutes of the United States Federal Reserve (Fed) showed the concern of officials about the possibility that progress in inflation has stalled and a longer period of restrictive monetary policy is necessary to control it in the world’s largest economy.
He euro fell 0.1% to $1.07026, following a 1% drop on Wednesday following US data. The pound sterling was trading up 0.22% at $1.2559, after losing 1.1% the previous day.
Signs from Europe
Investors’ attention was focused on US producer price data and the US monetary policy meeting. European Central Bank (ECB), looking for signs on whether Fed and ECB policies will begin to diverge by the end of the year.
The ECB decided to keep the reference rates unchanged at around 4.5%. The market was attentively awaiting references to a path of cuts after policy makers have given multiple clues, some quite explicit, that the entity will begin the reductions at its June meeting.
However, this Thursday the Central Bank clarified that it “will continue with a data-neutral and meeting-by-meeting approach to determine the appropriate level and duration of the restriction”, without committing in advance to a particular rate path.
Source: Ambito
