The neutral rate is the level at which economic activity is neither stimulated nor constrained, and is expected to be around 3.5% by mid-2023.
On Wednesday, the dollar benefited from safe-haven demand as stocks fell and as did Treasury yields.
“Yesterday’s (Tuesday) rally appears to have been, unsurprisingly, short-lived, having faded almost entirely in trading this morning,” said Michael Brown, head of market intelligence at Caxton in London.
As a result, safe-haven dollar demand has resurfaced, in a kind of “flight to cash,” and Treasuries have been unable to find demand despite shaky sentiment,” Brown added.
The dollar index, which tracks the greenback against six currencies, rose 0.4% to 103.76, poised to snap its longest losing streak since mid-March.
“Technically, bulls will be pleased that the dollar index has managed to hold above previous support at 103.20, which coupled with the continued gloomy economic backdrop should keep the dollar firm for now,” Brown said of Caxton.
The pound fell 1.1% against the dollar on Wednesday after data showed British inflation rose to 9%, the highest level in 40 years.
Investors took a dim view of riskier currencies, with the Australian dollar, seen as a liquid indicator of risk appetite, slipping 0.8%.
Bitcoin fell around 4% and was last trading at $29,094.59. Ether lost 6% and fell below $2,000.
Source: Ambito
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