Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) – The U.S. dollar rose on Tuesday, helped by hawkish comments from Federal Reserve officials and data showing a stable housing market in the world’s largest economy, suggesting the central bank will be in no hurry to revive its interest rate cutting cycle.
The dollar strengthened against the euro, yen, Swiss franc and commodity currencies such as the Australian and New Zealand dollars.
Federal Reserve Governor Michelle Bowman kicked off the fight for the dollar by reiterating her view Tuesday that keeping interest rates unchanged “for some time” will likely be enough to bring inflation under control. It also reiterated its readiness to raise external financing costs if necessary.
For her part, Fed Governor Lisa Cook said it would be appropriate to cut interest rates “at some point” given significant progress on inflation and a gradual cooling of the labor market. However, she was not sure about the date of introducing monetary policy easing.
“If you listen to the Fed speakers, you can see that they are very timid to overstate in one weak report that we put out, that overall we still have better reporting year to date,” said Jayati Bharadwaj, global financial strategist at TD Securities in New York.
“They look very non-committal and… also very data-dependent, given uncertainty about the outlook for inflation, which is higher in the U.S. than elsewhere in the world.”
On Tuesday, the data from the US were mixed, which allowed the dollar to continue its gains.
The report showed U.S. single-family home prices rose at a steady pace in April, rising 0.2% on the month after being flat in March. In the 12 months to April, house prices rose 6.3% after rising 6.7% in March. This pushed the dollar up a bit.
However, according to the Conference Board, U.S. consumer sentiment declined slightly in June, with the index rising to 100.4 from a downwardly revised level of 101.3 in May. However, the June number was slightly higher than the market forecast of 100. The report did not actually hurt the dollar.
A LOT WILL NEED TO KEEP THE DOLLAR WEAK
“Weakness in some of the previous data, such as retail sales and jobless claims, is not really enough to trigger a rally in the currency or a weakening in the dollar,” said Thierry Wizman, global currency and pricing strategist at Macquarie in New York.
“For the dollar to weaken, we will have to see not only tender data from the US, but also the Fed’s acceleration of interest rate cuts. We will have to see the data diverge in favor of the rest of the world.”
Investors are now eagerly awaiting Friday’s release of the U.S. personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation.
In the afternoon session, the dollar rose 0.1% against the yen to 159.68 yen, remaining in a tight range. Fear of intervention by Japanese officials deterred traders from selling the yen sharply against the dollar and other currencies.
Traders remained cautious about testing the 160 level, which prompted Tokyo’s 9.79 trillion yen ($61.33 billion) currency intervention in slow April and early May.
The yen’s latest decline came after the Bank of Japan’s (BOJ) policy meeting in June, where policymakers disappointed investors who had been betting on an immediate reduction in the BOJ’s massive bond purchases.
The euro fell 0.2% against the dollar to $1.0714. It has come under pressure amid political turmoil in France following President Emmanuel Macron’s shock call for early elections earlier this month.
Against a basket of currencies, it rose 0.1% to 105.72.
Sterling was slightly higher against the dollar at $1.2693, while the Australian dollar was down 0.1% at $0.6649.
little changed against the US currency at 7.2629 per dollar. It had earlier fallen to 7.2631 per dollar, the lowest level since mid-November, and on Tuesday was within range of the lower end of the central bank’s daily trading limit of 7.265.
Juan never crossed that threshold.
Politics was also in the spotlight for investors, with the first US presidential debate between President Joe Biden and his predecessor Donald Trump set for Thursday, and elections in France starting this weekend.
On the cryptocurrency front, bitcoin gained ground after suffering its worst day in more than two months earlier this week, partly due to outflows from ETFs, analysts say. was recently up 4.6% at $62,182.
Currency
offer
prices per hour
June 25
07:08
afternoon GMT
Description RIC Last US Pct YTD Pct High Low
to Close Change offer Offer
Previous
Session
Dollar 105.6 105.51 0.09% 4.17% 105.78 105.
index 36
Euro/Dollar 1.0715 1.0735 -0.18% -2.92% 1.0744 $1.0
ar 691
Dollar/Ye 159.62 159.695 -0.03% 13.19% 159.75 159.
No. 18
Euro/Yen 1.0715 171.34 -0.18% 9.9% 171.39 170.
71
Dollar/Sw 0.8944 0.8931 0.16% 6.28% 0.8953 0.89
it’s 2 p.m
Sterling sterling/ 1.2691 1.2685 0.07% -0.26% 1.2702 $1.0
Dollar 691
Dollar/Katwa 1.3653 1.3658 -0.02% 3.01% 1.3681 1.36
nadian 15
Australian/Up to 0.6648 0.6657 -0.11% -2.48% 0.6673 USD 0.6
636
Euro/Switzerland 0.9584 0.9585 -0.01% 3.21% 0.9595 0.95
65
Euro/Christmas 0.844 0.846 -0.24% -2.63% 0.8465 0.84
ling 31
New Zealand 0.6119 0.6124 -0.08% -3.17% $0.613 0.61
Dollar/Until 08
ll
Dollar/No 10.6077 10.5354 0.69% 4.66% 10.6228 10.5
road 209
Euro/Norway 11.3657 11.304 0.55% 1.26% 11.369 11.2
it’s 84
Dollar/Sw 10.5015 10.47 0.3% 4.32% 10.5207 10.4
Eden 557
Euro/Sweden 11.2528 11.2403 0.11% 1.15% 11.263 11.2
on 174
