The dollar hovered just below multi-decade highs on Tuesday as traders waited for a Federal Reserve rate hike and hints as to whether signs of a slowing economy will prompt a shift from their focus on inflation.
The euro rallied as high as $1.0235 but was hemmed in by uncertainty over Europe’s energy security, unhelped by a looming disruption to Russian gas flows west.
The yen stabilized at 136.33 per dollar.
The Fed concludes a two-day meeting on Wednesday. Traders have trimmed expectations as markets try to figure out if or when policymakers may halt their anti-inflation efforts amid signs the economy is weakening.
Futures pricing points to a 75 basis point (bp) rate hike with a 10% risk of 100bp.
“I don’t think the market has a very good, confident feeling that it’s going to be any kind of surprise,” said Imre Speizer, an analyst at Westpac in Auckland. “Which is enough to keep the dollar in place.”
The US Dollar Index was slightly lower at 106.320, but not too far below a 20-year high of 109.290 hit in mid-July as the greenback rallied on both expectations of US interest rate hikes and as a safe bet in one global slowdown is gaining strength.
A profit warning from Walmart on Monday saying customers were tightening their belts was the latest sign things are getting tough after a handful of softer-than-expected data prints from the US and Europe were hot on its heels.
The Australian and New Zealand dollars made small gains overnight but progress was limited.
The Aussie was just below its 50-day moving average at $0.6959 as traders await Wednesday’s inflation data release.
Overall consumer prices are galloping 6.2% year-on-year, the fastest pace in more than three decades.
“There could be some slight upside potential for the Aussie depending on the data,” analysts at ANZ Bank said. “A 50bp hike from the (Reserve Bank of Australia) next week is far from a foregone conclusion, the main risk is a larger hike,” they said. “But that would require a very, very high CPI number as the RBA has more flexibility with their monthly meetings.”
A 50 basis point hike is also seen as the Bank of England’s most likely move over the next week, despite providing little support for sterling.
The pound rose 0.1% to $1.2065 on Tuesday.
Elsewhere, cryptocurrencies recouped last week’s gains.
Bitcoin was at $21,100, its lowest level since July 18.
Ether also hit its lowest sine on July 18 at $1,411.
Global Growth Fears, Fed Keeps Dollar Supported – SABC News
Source link Global Growth Fears, Fed Keeps Dollar Supported – SABC News