FOREX-Dollar stronger as inflation worries dampen risk sentiment

Band Saqib Iqbal Ahmed

NEW YORK, May 31 (Reuters)The U.S. dollar rose broadly on Tuesday as Treasury yields climbed and concerns about a further acceleration in global inflation kept investors’ risk appetite at bay.

The dollar was supported by demand for safe havens. U.S. stocks fell on Tuesday as soaring oil prices and hawkish comments from a Federal Reserve official spooked investors.

U.S. Treasury yields climbed on Tuesday, a day after Fed Governor Christopher Waller said the Fed should be ready to raise interest rates by half a percentage point at every meeting from from now until inflation is firmly under control.

The US Dollar Currency Index =USDwhich tracks the greenback against six major currencies, rose 0.5% to 101.92, on pace with its best one-day gain in nearly tNope weeks. The dollar index, up about 6.6% for the year, is down 1.2% for May, on pace with its worst monthly loss in a year.

Tuesday’s rebound in the U.S. dollar suggests better support for the dollar index around its 50-day moving average, which the index has been testing for the past two sessions, said Shaun Osborne, chief currency strategist at Scotiabank, in a note.

The dollar index has not closed below its 50-day moving average since mid-February, but has moved closer to it in recent sessions.

“We believe the USD is unlikely to rally significantly and we still view the price action as reflecting the early stages of a broader reversal from the recent USD uptrend.” said Osborne.

For now, the euro has remained weak as data on Tuesday showed euro zone inflation hit a record high in May, adding pressure on the European Central Bank as it pushes back a recession and seeks to rein in high prices with gradual increases in interest rates in the months ahead.

Inflation in the 19 countries sharing the euro accelerated to 8.1% in May from 7.4% in April, beating expectations of 7.7% as price growth continued to widen, indicating that it is no longer just energy that drives the overall figure.

Against the dollar, the euro EUR=EBS fell 0.6% to a 5-day low.

News that European Union leaders agreed in principle on Monday to cut most oil imports from Russia by the end of this year has boosted oil prices and offered some currency support. raw material.

The Canadian dollar CAD=D3 touched 1.2653 to the dollar, near a one-month high hit overnight, ahead of Wednesday’s Bank of Canada meeting in which all 30 economists polled by Reuters expect a rise rates from 50 basis points to 1.50%.

In cryptocurrencies, bitcoin BTC=BTSP climbed 0.42% to $31,363.19, a nearly 3-week high.

GRAPH: World exchange rates

GRAPH: Finding Support

(Reporting by Saqib Iqbal Ahmed; Editing by Will Dunham)

(([email protected]; @SaqibReports; +1 646 223 6054))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Comments are closed.