© Reuters.
Investing.com – The US dollar rose in early European trade on Tuesday, while the pound held ground ahead of the Bank of England’s policy-setting meeting this week.
At 02:55 ET (06:55 GMT), the greenback, which measures the greenback against a basket of six other currencies, was trading 0.1% higher at 101.183, but still off its recent lows.
The dollar rose slightly after stronger-than-expected data on Friday indicated that the US labor market remained resilient in April.
Trading ranges are tight, as traders await data on Wednesday for April, when economists expect widely watched prices, which exclude volatile food and fuel prices, to rise 5.5% year-on-year, down slightly from 5.6%. Increase a month earlier.
It delivered its 10th consecutive rate hike last week, as was widely expected. He also indicated that he might pause his tightening campaign in June, though policymakers were on the hook for suggesting that such a move was dependent on incoming economic data.
“Looking at the bigger picture, however, it seems clear that tighter US credit conditions will only exacerbate the US slowdown in 2023 and deinflation process and we think there will be plenty of dollar sellers if we see any surprise 1%-2% rally in “The dollar over the next two weeks,” ING analysts said in a note.
Elsewhere, it was trading 0.1% higher at 1.2633, just below the previous session’s one-year peak of 1.2668, ahead of the central bank’s monetary policy meeting on Thursday.
It looks set to raise interest rates another 25 basis points to 4.5%, as it struggles still to run in double digits, the highest of any large developed economy.
It fell 0.1% to 1.0999, still close to its highest levels for the year despite the slowing pace of interest rate increases last week.
The European Central Bank’s chief economist Philip Lane said on Monday that the eurozone will slow sharply this year, but price growth momentum remains high for the time being, including for essential goods and services.
ING added: “In addition to what should be obvious supportive interest rate trends for EUR/USD this year, energy prices should be much lower which has led to a significant improvement in the trading conditions of the euro.”
The yen fell 0.2% to 134.77, with the yen marginally supported by comments from Bank of Japan Governor Kazuo Ueda, who indicated that the central bank will end its pessimistic policy of yield curve control once inflation threatens to sustainably reach its 2% target.
It fell 0.2% to 0.6771, while it rose 0.2% to 6.9241 after data showed China contracted more than expected in April and grew at a slower pace than the previous month, indicating a fragile recovery in the world’s second largest economy.