© Reuters. A man counts his money as he leaves an exchange office in Istanbul, Turkey on September 26, 2022. REUTERS/Dilara Cinkaya/File Photo
By Kevin Buckland
TOKYO (Reuters) – The US dollar rose to a five-week high against its major peers on Monday, boosted by domestic inflation fears and concerns about growth globally, although its gains were capped by expectations that the Federal Reserve will cut interest rates later this year. .
The Turkish lira fell to its lowest level in two months after the weekend elections appeared headed for a run-off, while the Thai baht gained nearly 1% after the Thai opposition defeated military-aligned parties also in the weekend elections.
The dollar got a boost from higher Treasury yields after a survey of US consumers’ long-term inflation expectations jumped to their highest levels since 2011, triggering another possible Fed rate hike next month, with traders putting those odds at 11.5%.
Concerns about facing the debt ceiling over raising the US government’s borrowing limit of $31.4 trillion also provided some support for the safe-haven dollar.
“Now that the Fed is kind of out of the way, inflation in the US is weaker than expected. I think the markets are considerably more (comfortable) with the Fed’s outlook. Now the focus is on the debt ceiling and when , head of Asia research at ANZ, says the “date of X” is, and whether or not they can enter lockdown mode.
However, interest rate cuts are still being priced into the market from July through the end of the year, on expectations that policy makers will ease credit conditions in the US after a rout in US regional lender stocks, triggered by the collapse of Silicon. Valley Bank in March.
That limited gains in the dollar, which sent the euro up 0.19% to $1.08695, after the single currency fell to a five-week low of $1.08445 earlier in the session.
The pound rose 0.2% to $1.24725.
It increased by 0.62%, to $0.6683, while it increased by 0.45%, to $0.6219.
“If you remove the uncertainty about the debt ceiling situation, the sentiment turns bearish against the dollar,” Goh said.
In Asia, China is at the center of renewed concerns about a global recession after a series of disappointing economic data, including on imports and inflation, indicated tepid domestic demand. More clues could come from Tuesday’s retail sales report.
It fell to a new two-month low of 6.9749 per dollar in offshore trade on Monday, before paring losses slightly to 6.9633.
The People’s Bank of China kept the seven-day reverse repo rate unchanged at 2% on Monday.
The pair, which measures the currency against six major peers, reached 102.75 for the first time since April 10 in early Asian trade, although it later fell 0.11% to 102.58.
The index rose 1.4 percent last week.
That didn’t change much in Tokyo, hovering around 3.485%.
This has kept pressure on the yen, which tends to move against long-term yields in the US. The Japanese currency fell to its lowest level at 136.27 per dollar, and last fell by about 0.3%, at 136.17 per dollar.
The dollar rose in the latest transactions by 0.28 percent to 19.635 Turkish liras, after it jumped earlier to 19.70 for the first time since the tenth of March.
Turkey headed for a run-off after President Recep Tayyip Erdogan outperformed expectations, far ahead of his rival but failing to secure an outright majority.
The US currency fell 0.72% to 33.735 baht in intra-Thai trading, and earlier fell 0.92%.
Thailand’s opposition parties scored a stunning election victory on Sunday, but it was far from certain whether they would form the next government, with parliamentary rules written by the military junta.
“It appears that the political stability implied in the Goldilocks result may fuel the (Thai baht) rally,” said Vishnu Varathan, Head of Economics and Strategy at Mizuho Bank.
“Move Forward and Pheu Thai’s wins did not upset expectations, and support economic optimism about private sector revival.”