The U.S. dollar resumed its rally on Tuesday after dipping against sterling and the euro a day earlier, putting it back on track for its first monthly gain since September. The greenback’s rally gathered momentum in recent weeks as upbeat economic data led to mounting expectations that the U.S. Federal Reserve will have to raise interest rates more than initially expected. The dollar index, which measures the currency against a basket of peers, was flat at 104.64, but was still set for a February gain of 2.6%, its first monthly ...

The dollar climbed to seven-week peaks on Friday, after data showed U.S. inflation accelerated while consumer spending rebounded last month, reinforcing expectations that the Federal Reserve may need to hike interest rates a few more times this year to curb the surge in prices. Against the yen, the dollar hit a two-month high, while rising to its strongest level in seven weeks versus the Swiss franc following the data. The personal consumption expenditures (PCE) price index, tracked by the Fed for monetary policy rose 0.6% last month after gaining 0.2% ...

USD: Dollar strength is not just a Fed story It has been quite surprising to see USD/CNH move back above the 6.90 area and also see USD/KRW stay bid above 1300. The 2023 narrative was meant to be about US disinflation, China re-opening and $/Asia playing a major part in the broad dollar decline. That has not been the case. Away from the US disinflation/Fed story, the rally in USD/Asia and USD/CNH may also be down to a re-appraisal that: a) Asian trade surpluses may be harder to come by ...

The dollar index inched higher on Friday and was set for a fourth-consecutive weekly gain as investors braced for U.S. interest rates to be higher for longer after a set of strong U.S. economic data. The yen fell after a volatile Asian day, with incoming Bank of Japan Governor Kazuo Ueda saying it was appropriate to keep ultra-loose monetary policy. Strong U.S. jobs data and rhetoric from Federal Reserve officials this month about openness to higher rates if needed in the fight against inflation have resulted in the dollar erasing ...

The dollar was steady against its major peers on Thursday, as new data showed a still-tight U.S. labor market, underpinning convictions that the Federal Reserve’s monetary policy tightening may be far from over. The number of Americans filing new claims for unemployment benefits unexpectedly fell in the week ended Feb. 18, decreasing 3,000 to a seasonally-adjusted 192,000, according to the Labor Department. The dollar index , which tracks the greenback against six major peers, modestly rose 0.02% to 104.52, slipping below the 104.68 high seen in late morning trading in ...

USD: FOMC minutes can keep the dollar supported Despite Federal Reserve Chair Jerome Powell sounding quite relaxed at the 1 February press conference and declaring that the ‘disinflation process has started’, the minutes of that meeting were largely hawkish. The consensus agreed that further rate increases were needed and that inflation remained unacceptably high. There were no hints of a pause and very little to divert market pricing of three more 25bp hikes from the Fed over the March, May and June meetings. This backdrop can keep the dollar supported ...

The end of modern globalisation may owe more to the fortunes of the U.S. dollar than Kremlinologists, Sinologists or military analysts acknowledge. A year from Russia’s invasion of Ukraine, fracturing geopolitics seems to be rolling back world trade links and financial interdependence at speed. Political blocs are re-coagulating, economic nationalism is on the rise and international finance has to parse a level of cross-border risk not seen for over 30 years. But global financial conditions – and the strength of the U.S. dollar as a proxy for that – may ...

The dollar held shy of multi-week peaks against other major currencies on Thursday, a day after minutes from the Federal Reserve’s last policy meeting supported, but did not add to markets’ view the central bank will raise rates further. The euro was flat at $1.0606, just above its near seven-week trough of $1.0598 hit in the previous session, and the dollar sat at 134.8 Japanese yen, just off its two-month top of 135.2 reached on Tuesday. The dollar index, which tracks the greenback against six major peers was at 104.48, ...

Sterling retreated on Wednesday, after surging on the back of stronger-than expected British business activity, as traders awaited consumer confidence data and focused on Britain’s political headaches. After strengthening 0.6% against the dollar on Tuesday, sterling was down 0.24% to $1.2083 at 1151 GMT. Against the euro, it was steady at 87.93, having climbed 1% on Tuesday. Data showed on Tuesday an unexpected bounce in Britain’s preliminary “flash” S&P Global/CIPS UK Composite Purchasing Managers’ Index, boosting speculation the country might avoid a long recession and bets the Bank of England ...

USD: Helped by geopolitical uncertainty We recently argued that the dollar rally would run out of steam, as the hawkish repricing of Federal Reserve rate hikes has likely peaked, and that external factors would be a more likely cause of further USD appreciation. This has indeed been the case since market action resumed after Monday’s US holiday, as a return of geopolitical risk weighed on global risk assets and buoyed the safe-haven dollar. The focus is now on Russia’s next moves on the Ukraine front ahead of a potentially turbulent ...

The dollar was little changed on Wednesday, continuing to trade near six-week highs on the back of strong economic data. Survey data released on Tuesday showed U.S. business activity unexpectedly rebounded in February to reach its highest in eight months. In the euro zone, a survey-based gauge of activity also surged, hitting a nine-month high. The signs of economic strength caused traders to pencil in further interest rate hikes from the Federal Reserve on Tuesday, driving the U.S. S&P 500 stock index 2% lower and the dollar up 0.3%. On ...

The rouble weakened on Tuesday despite increased demand for the currency ahead of month-end tax payments as President Vladimir Putin delivered a nuclear warning to the West over Ukraine and sanctions fears continued to hurt Russian assets. Putin said Russia was suspending a landmark nuclear arms control treaty, announced new strategic systems had been put on combat duty and warned that Moscow could resume nuclear tests. He also took a swipe at business elites in a wide-ranging address to both houses of parliament. By 1425 GMT the rouble was 0.4% ...

USD: Supported by risk-off mood, but rally looks tired After a very quiet start to the week in FX due to a US holiday, we should start to see some action today. Yesterday’s visit by President Joe Biden to Kyiv and the pledge for more support to Ukraine don’t have clear implications for markets in the near term, but probably reiterate the now well-established notion that this will be a long conflict. The ramifications for the global economy can still be quite deep, especially in neighbouring Europe, but energy prices ...

The euro stayed under pressure on Tuesday after data showed euro zone manufacturing activity deteriorated this month, although a rebound in the more inflation-sensitive services sector kept losses in check. The euro has been struggling against the dollar in particular over the past couple of weeks, after strong U.S. labour data and signs of persistent inflation have raised the chances that U.S. interest rates will rise further than many previously anticipated. S&P Global (NYSE:SPGI)’s flash Composite Purchasing Managers’ Index (PMI) for the euro zone, seen as a good gauge of ...

The dollar edged lower on Monday but kept close to Friday’s six-week high, after a flurry of economic data reinforced market expectations of tighter monetary policy from the Federal Reserve. The U.S. dollar index , which measures the dollar against six other major currencies, slipped 0.2% to 103.81. It is still up almost 1.8% for the month, on track for its first monthly gain since September. It hit a six-week high of 104.67 on Friday. Liquidity is expected to remain thin on Monday, with U.S. markets closed for Presidents’ Day. ...