© Reuters. FILE PHOTO: US dollar banknotes are seen in this illustration taken on March 10, 2023. REUTERS/Dado Rovic/Illustration
Written by Karen Britel
NEW YORK (Reuters) – The dollar rebounded from a two-week low on Friday as investors awaited inflation data and the Federal Reserve’s interest rate decision next week for any fresh clues about a possible hike by the U.S. central bank.
The Fed is expected to hold interest rates steady at its June 13-14 meeting, but is likely to remain hawkish and point to a potential hike in July as inflation remains above its 2% target.
“They still think they need to do more, and I also think they will continue to dampen expectations of policy easing,” said Vasily Serebryakov, foreign exchange strategist at UBS in New York.
The Fed is expected to revise its “dot plot” of policymakers’ expectations on the inflation rate and inflation expectations, Serebryakov said, “so I think the Fed will remain hawkish.”
Data released on Tuesday is expected to show headline inflation rose at an annualized rate of 4.1% in May, while core prices rose 5.3%.
The euro was last down 0.30% against the dollar at $1.0749. The dollar rose 0.34% to 139.40 yen.
which measures the currency against six major pairs, it rose 0.22% to 103.53.
The greenback is largely range-bound as investors await clearer signs of whether the economy will remain strong and hyperinflationary, or if it is heading for deflation.
Data on Thursday showed that the number of Americans filing new applications for unemployment benefits rose to the highest level in more than a year and a half last week.
Last Friday, jobs data for May showed employers added 339,000 jobs, more than expected, but unemployment rose to a seven-month high of 3.7%.
“This jump puts jobless claims near a two-year high, and markets read it as a clear sign of upcoming weakness in the US economy and increased Fed reluctance to increase,” said CaxtonFX strategist David Stritch.
The European Central Bank and the Bank of Japan are scheduled to meet next week. The European Central Bank is expected to raise interest rates in the eurozone by 25 basis points to 3.50% on Thursday, while the Bank of Japan is likely to leave interest rates unchanged after its two-day meeting on Friday.
The Bank of Canada and the Reserve Bank of Australia rattled the markets earlier this week by raising interest rates to tackle stubborn inflation.
The Norwegian krone rose sharply after data showed that core inflation in Norway jumped to a record high in May. Core inflation, which excludes changes in energy prices and taxes, rose 6.7 percent year-on-year, up from 6.3 percent in April and beating the average forecast of 6.2 percent of analysts polled by Reuters.
The dollar fell 1.34% to 10.76 crowns, the lowest level since May 17.
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The currency bid prices at 3:00 pm (1900 GMT)
Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid
previous change
a class
Dollar Index 103.5300 103.3200 +0.22% 0.039% +103.5800 +103.3100
EUR/USD 1.0749 USD 1.0782 -0.30% + 0.33% + 1.0786 USD + 1.0744 USD
USD/JPY 139.3950 138.9300 +0.34% +6.32% +139.7200 +138.7650
EUR/JPY 149.83 149.78 +0.03% +6.79% +150.4300 +149.6500
USD/CHF 0.9031 0.8992 +0.44% -2.33% +0.9032 +0.8985
GBP/USD 1.2576 USD 1.2558 USD + 0.13% + 3.97% + 1.2590 USD + 1.2536 USD
USD/CAD 1.3351 1.3359 -0.06% -1.47% +1.3371 +1.3313
AUD/USD 0.6740 USD 0.6716 +0.34% -1.14% +0.6751 USD +0.6694 USD
EUR/CHF 0.9708 0.9692 +0.17% -1.89% +0.9718 +0.9685
EUR/GBP 0.8546 0.8584 -0.44% -3.37% +0.8590 +0.8542
0.6125 NZD 0.6096 NZD +0.48% -3.54% + 0.6139 NZD + 0.6087 NZD
dollars / dollars
Dollar / Norway 10.7600 10.9020 -1.34% + 9.60% +10.9110 +10.7460
Euro / Norway 11.5688 11.7314 – 1.39% + 10.25% +11.7690 +11.5470
Dollar / Sweden 10.8234 10.7937 -0.11% +3.99% +10.8593 +10.7828
Euro / Sweden 11.6305 11.6428 -0.11% +4.31% +11.6877 +11.6232
