© Reuters
Investing.com – The US dollar fell in early European trade on Monday, but remained near a five-week high on inflation concerns, while the Turkish lira weakened on political uncertainty.
At 03:10 EST (07:10 GMT), the dollar, which measures the greenback against a basket of six other currencies, was trading down 0.1% at 102.420, after rising to 102.75 for the first time since April 10 in earlier in the session.
Interest rates rose last week for the 10th time in a row, but hinted they may be about to pause on the toughest round of policy tightening in 40 years as it scrutinizes economic data and assesses the impact of tightening so far.
It rose 4.9% in April, down from 5% in March, but still well above the Fed’s 2% target, indicating that inflation has held steady, while a survey of long-term inflation expectations of US consumers jumped to its highest level since 2011. .
Federal Reserve Governor Michelle Bowman said on Friday that the US central bank may need to raise interest rates more if inflation remains high.
“If inflation remains high and the labor market tightens, then additional monetary policy tightening is likely to be appropriate to achieve a sufficiently constrained monetary policy stance to reduce inflation over time,” Bowman said.
The dollar also helped position it as a safe haven amid fears of default with no agreement to raise the country’s debt ceiling in sight.
Key players, including President Joe Biden and House Speaker Kevin McCarthy, are likely to meet early this week to discuss budget negotiations after canceling Friday’s meeting.
“We continue to believe that investors are anxiously looking forward to a scenario where it ultimately takes a negative market reaction to break the deadlock, and the lack of progress toward a deal could certainly continue to provide some support for the dollar,” analysts at ING said in a note.
Elsewhere, it rose 0.4% to 19.6350, with the Turkish lira dropping to a two-month low after weekend presidential elections failed to produce a tangible result, with neither incumbent President Recep Tayyip Erdogan nor his rival, Kemal Kilicdaroglu, crossing the 50% threshold. necessary to achieve this. Avoid runoff.
The pair will now go head to head on May 28, with other contender Sinan Ogan disqualified, resulting in another two weeks of uncertainty.
It rose 0.2% to 1.0868, after falling to a five-week low of 1.0845 earlier in the session.
The eurozone is due to release revised first-quarter data on Tuesday, with economists forecasting that the bloc’s economy expanded just 0.1% in the three months to March.
It rose 0.1% to 1.2471, it rose 0.4% to 136.25, it rose 0.5% to 0.6678, while it fell to 6.9579, with the yuan trading at a two-month low against the dollar earlier on Monday.