The dollar rises against most major currencies on Wednesday, with the euro down 0.14% at $1.072. The euro hit a 10-month high of $1,103 on February 2, but has since fallen.
“Is a reaction to CPI dataand also the tone of Fed officials recently,” said jane foley, Rabobank’s head of foreign exchange strategy in dialogue with Reuters. “The market now expects a higher spike in the Fed’s federal funds rate than they expected even a week or two ago.”
He Japanese yen loses 0.2% to 133.34 units per dollar. It hit a six-week low early in the session at 133.44 yen.
In December, the Fed member median forecast called for the cost of credit to peak at 5.1% this year. But interest rate futures markets are now pricing in a high above 5.2% and traders are increasingly unsure of cuts in 2023. Rates currently sit between 4.5% and 4.75%.
The fed officials they adopted a harsh tone on Tuesday: “With the strength of the labor market, there are clearly risks that inflation will stay higher for longer than expected, or that we will need to raise rates further,” said the president of the New York Fed, john williams.
“We must remain prepared to continue raising rates for a longer period than anticipated, if that avenue is necessary to respond to changes in the economic outlook or to offset any unwanted easing in conditions.” said the president of the Dallas Fed, Lorie Loganin a speech at Prairie View A&M University in Texas.
Richmond Fed President Thomas Barkin added in dialogue with Bloomberg TV: “Inflation is normalizing but it is coming down slowly. I just think there will be a lot more inertia, more persistence in inflation than maybe we all want.”
He dollar index, which measures the US currency against its peers, rose 0.7% to 103,800 after closing virtually unchanged on Tuesday. Thus it reaches its highest value at least since December 27.
The pound sterling falls 0.79% to $1.208 after the inbritish inflation cooled higher than expected in January at 10.1%, easing some of the pressure on the Bank of England to continue raising rates.
Source: Ambito
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