He dollar is appreciated this Wednesday, April 19, driven by the rise in US Treasury yieldsalthough the pound resisted after data showed that the inflation british remained above 10% in Marchwhich increased the pressure on the bank of england to keep raising rates.
The dollar index, which measures the currency’s performance against a basket of six currencies, rises 0.2%, to 101.65, as increased market skepticism about expectations of US rate cuts at the end of the year pushed up US debt yields.
The two-year treasury yieldsvery sensitive to Federal Reserve Rate Expectationswere up nearly 9 basis points to a one-month high of 4.2692.
According to evaluation of data from the CME Fedwatch tool, there are around of one-third chance that US rates will stay at their current level or go up after the December Fed meeting.
The dollar rises 0.5% against the Japanese yen, interest rate sensitive currency at 134.82 units per dollarhaving briefly surpassed 135 units for the first time in a month, while the euro falls 0.1% to $1.0922.
Data on Wednesday showed that the UK consumer price inflation fell less than expected in March, to 10.1% from 10.4% in February, meaning that The UK has the highest consumer inflation rate in Western Europe.
Sterling rose 0.1% to $1.2441outperforming other currencies, due to expectations that the Bank of England may have to raise rates further to reduce inflation.
On Wednesday, Deutsche Bank reviewed the raises UK rate expectations to include two more 25 basis point hikes by the Bank of England. Morgan Stanley now anticipates awith the risk of a second.
The head of the St. Louis Fed, James Bullard, told Reuters in an interview that he leans towards a additional hardening of 75 basis pointsagainst the market consensus for an additional 25 basis point rise next month and the possibility of up to two quarter point cuts by the end of the year.
By contrast, the president of the Atlanta Fed, Raphael Bosticstated in an interview with CNBC that he expected only a rise of more than a quarter point, followed by a prolonged pause.
Source: Ambito
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