The supermarket dollar gains positions at the start of the trading day on Tuesday in Europe, while sterling held strong ahead of this week’s Bank of England meeting.
The dollar index, which tracks the dollar against a basket of six other major currencies, rose 0.1% to 101.183, though still not far off recent lows.
The greenback rose after a better-than-expected jobs report was released on Friday, indicating that the US job market had held firm in April.
Trading ranges are tight, however, pending April inflation data on Wednesday, economists expect the core Consumer Price Index, which excludes volatile food and fuel prices, to rise 5.5% on a year-on-year basis, which is a slight drop from the previous month’s 5.6% figure.
Last week, the US central bank made its tenth consecutive interest rate hike, as expected. He also indicated that it could halt its tightening campaign in June, although policy makers took pains to point out that such a move depended on emerging economic data.
“However, looking at the bigger picture, it seems clear that tightening US credit conditions will only exacerbate the US slowdown and disinflation in 2023, and we suspect there will be plenty of dollar sellers in the event that there is a surprise rally of the dollar of 1%-2% in the coming weeks”, explain the analysts of ING (AS:INGA) in a note.
Elsewhere, GBP/USD is up 0.1% to 1.2633, just below the 1-year high from the previous session to 1.2668, awaiting the Thursday’s central bank monetary policy meeting.
The Bank of England appears set to raise interest rates another 25 basis points to 4.5% to fight inflation, which remains in double digits, the highest of any major advanced economy.
EUR/USD is down 0.1% to 1.0999, still close to year-highs despite the European Central Bank slowing the pace of its rate hikes last week.
Euro zone inflation will slow sharply this year, ECB chief economist Philip Lane said on Monday, but the momentum from price growth remains strong for now, including for underlying goods and services.
“In addition to what should clearly be favorable interest rate trends for the EUR/USD this year, energy prices should fall much further, which have brought a big improvement to the euro’s trading terms,” ING adds. .
USD/JPY is down 0.2% to 134.77, slightly boosted by Bank of Japan Governor Kazuo Ueda’s remarks that the central bank will end its currency control policy. yield curve when inflation threatens to sustainably reach its target set at 2%.
AUD/USD is down 0.2% to 0.6771, while USD/CNY is up 0.2% to 6.9241 after reports that Chinese imports fell more than expected in April and Exports rose at a slower pace than the previous month, pointing to a fragile recovery in the world’s second-largest economy.
Source: Ambito
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