He dollar The US loses positions at the start of Monday’s trading in Europe but remains near five-week highs on inflation concerns, while the Turkish Lira recedes due to political uncertainty.
The dollar index, which tracks the dollar against a basket of six other major currencies, fell 0.1% to 102.420, after rising to 102.75 for the first time since April 10 earlier in the day. .
The Federal Reserve raised interest rates last week for the 10th time in a row, even though it has hinted that it may be about to pause the most aggressive round of monetary policy tightening in 40 years. while studying the economic data and assessing the impact of adjustments to date.
Consumer price inflation rises to 4.9% in April, down from 5% in March, though still well above the Federal Reserve’s 2% target, suggesting that inflation is holding firm, while a survey of US consumers’ long-term inflation expectations has soared to its highest value since 2011.
Fed Governor Michelle Bowman said on Friday that the US central bank will likely have to raise interest rates further if inflation remains so high.
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“Should inflation remain high and the labor market remain tight, further monetary policy tightening will probably take place to achieve a tight enough stance to allow inflation to decline over time,” Bowman explained.
The US debt ceiling is also worrying
Its safe-haven status has also helped the dollar in an environment of concern over default, with no deal in sight to raise the country’s debt ceiling.
The main players in these talks, including President Joe Biden and House Speaker Kevin McCarthy, will likely meet earlier this week to discuss budget negotiations following the cancellation of Friday’s meeting.
“We continue to think that investors are watching with concern a scenario in which an adverse market reaction would ultimately be required to break the impasse, and the lack of any progress towards a deal may definitely continue to offer some support to the dollar.” ING analysts said in a note.
On the other hand, the USD/TRY pair points up 0.4% to the level of 19.6350, as Turkish lira plunges to two-month lows after weekend presidential election failed to yield a concrete resultsince neither the current president, Recep Tayyip Erdogan, nor his rival, Kemal Kilicdaroglu, exceeded the 50% threshold necessary to avoid a second round.
Both will meet on May 28 with another contender, Sinan Ogan, now ruled out, leading to two more weeks of uncertainty.
EUR/USD is up 0.2% to 1.0868, after posting fresh five-week lows at 1.0845 at the start of the session. Revised first quarter GDP data will be released on Tuesday. Economists believe that the euro zone economy will have grown by just 0.1% between January and March.
GBP/USD is up 0.1% to 1.2471, USD/JPY up 0.4% to 136.25, AUD/USD up 0.5% to 0, 6678, while the USD/CNY falls to 6.9579 and the yuan registers lows of more than two months against the dollar this Monday.
Source: Ambito
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