© Reuters. FILE PHOTO: US dollar banknotes are shown in this illustration taken on February 14, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
Written by Laura Matthews
NEW YORK (Reuters) – The U.S. dollar rose against the euro and sterling on Friday and was on track for its biggest weekly gain since February, as investors turned to safe havens after consumer sentiment data raised concerns about the U.S. debt ceiling and monetary policy. .
A University of Michigan poll released on Friday showed that consumer confidence in the United States fell to its lowest level in six months amid fears that a political row over raising the federal government’s borrowing ceiling could lead to a recession. Consumers’ long-term inflation expectations have jumped to their highest levels since 2011. This could affect the Federal Reserve, which indicated last week that it may pause interest rate hikes.
Spreads continue to tilt in favor of the dollar, said Carl Chamota, chief market strategist at Corbay in Toronto.
“The surprises in the University of Michigan Consumer Survey paint a kind of stagflationary picture for the US economy and one that could justify another rate hike at the Fed’s June meeting, but would certainly dampen the odds of a rate cut in the latter half of the year.”
Recent data showing a slowing economy reinforced the case that the Fed will pause interest rate hikes at its June meeting. The data also showed that the US Consumer Price Index fell to 4.9% year-on-year in April. Moreover, weekly jobless claims rose more than expected.
But the labor market remains tight, with 1.6 jobs per unemployed person in March, well above the 1.0-1.2 range consistent with the market that doesn’t generate much inflation.
Fed Governor Michele Bowman said the central bank will likely need to raise interest rates further if inflation remains high.
The pound fell 0.5 percent to $1.2448, while the euro fell 0.6 percent to $1.0851, a day after it fell to its lowest level in a month.
That left it up 0.6% at 102.69, posting a weekly gain of 1.4% – its biggest weekly rise since February.
Joe Manimbo, senior market analyst at Convera, noted that rising U.S. inflation has spurred some doubts about the Fed’s year-end rate cuts, and that the view that other central banks may be closer to halting rate hikes has also affected the outlook. European currencies.
“The dollar’s gains this week were multidimensional. The dollar served as a safe haven from concerns about the weak Chinese economy and volatility on Wall Street,” Manimbo wrote.
“While this is strong, it is too early to tell whether dollar weakness has turned the corner. Markets will need to discount interest rate cuts to give the dollar meaningful upward momentum.”
Futures traders see a pause in June, and the fed funds drop later in the year. The Fed’s target range is 5% to 5.25%, having risen rapidly from 0% since March 2022.
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Coin bid prices at 2:41 PM (1841 GMT)
Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid
previous change
a class
Dollar index 102.6900 102.0900 +0.60% -0.773% +102.7100 +101.9300
EUR/USD 1.0849 USD 1.0915 -0.60% + 1.26% + 1.0936 USD + 1.0849 USD
USD/JPY 135.6900 134.5550 +0.84% +3.49% +135.7500 +134.4100
EUR/JPY 147.22 146.85 +0.25% +4.93% +147.4600 +146.6700
USD/CHF 0.8979 0.8944 +0.39% -2.89% +0.8985 +0.8899
GBP/USD $1.2445 $1.2513 -0.54% + 2.91% + $1.2540 + $1.2445
USD/CAD 1.3564 1.3490 +0.56% +0.12% +1.3565 +1.3481
AUD/USD 0.6636 USD 0.6702 -0.98% -2.64% + 0.6706 USD + 0.6637 USD
EUR/CHF 0.9740 0.9759 -0.19% -1.57% +0.9767 +0.9725
EUR/GBP 0.8715 0.8723 -0.09% – 1.46% +0.8732 +0.8694
0.6182 NZD 0.6297 NZD -1.78% -2.59% + 0.6300 NZD + 0.6185 NZD
dollars / dollars
Dollar / Norway 10.6900 10.6770 +0.03% +8.82% +10.7190 +10.6480
Euro/Norway 11.6005 11.6517 -0.44% +10.50% +11.7088 +11.5820
Dollar / Sweden 10.3921 10.3324 -0.04% -0.15% +10.3941 +10.2917
Euro / Sweden 11.2701 11.2746 -0.04% + 1.08% +11.2933 +11.2252