USD falls to 3-week low as Fed rate hike almost complete

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NEW YORK: The dollar fell to a three-week low on Monday as remarks by a US Federal Reserve official boosted market expectations that the US central bank was nearing the end of its tightening cycle.

But the Fed is widely expected to raise rates by another 25 basis points this month, despite Friday’s report showing the lowest U.S. job growth in two-and-a-half years. The expected rate hike in July will follow the Fed’s moratorium in June.

Fed officials led by San Francisco Fed President Mary Daly said Monday that the central bank will likely need more rate hikes to curb stubborn inflation, but the end of the current monetary policy tightening cycle is near. said it was on.

In afternoon trading, the dollar index, which measures the performance of the US currency against a basket of major currencies, fell 0.3 percent to a three-week low of 101.98.

The euro climbed to a three-month high of $1.0997 against the dollar and last traded 0.2% to $1.0995.

Against the yen, it fell to 141.32 yen, the lowest since June 21. Finally, it fell 0.6% to 141.335 yen. U.S. nonfarm payrolls fell nearly 1.3% on Friday after June’s 209,000 increase in U.S. nonfarm payrolls fell below market expectations for the first time in 15 months.

“The weakening of pressure on the dollar … is difficult to deal with from a relative interest rate and growth perspective,” said Eric Nelson, macro strategist at Wells Fargo in London.

“U.S. growth exceeded expectations, but Europe and China underperformed. I think the U.S. economy is stronger than we believe,” Nelson added.

Friday’s jobs report, which reflected persistently strong wage growth, showed markets priced in another rate hike later this month, even if a rate cut once expected in the second half of 2023 now seems unlikely. I made it clear that

With the US nonfarm payrolls data settling down, all eyes are on Wednesday’s US inflation data. Core CPI in June is expected to rise by 5% annually.

Meanwhile, Norway’s crown, the second worst-performing G10 currency this year, rose after data showed core inflation continued to rise to a new record in June.

The Norwegian royal family held firm against the dollar and euro after Norway’s inflation data. The dollar fell 1 percent last week to $10.493 and the euro fell nearly 1 percent to $11.5363.

The Chinese yuan weakened against the dollar after weak inflation data for the world’s second-largest economy.

Data on Monday showed factory prices fell at the fastest pace in seven-and-a-half years in June and consumer inflation was at its lowest since 2021, raising hopes for more support from Chinese officials. ing.

The US dollar changed slightly against the offshore renminbi to 7.230.

Weak Chinese economic data sent the Australian and New Zealand dollars, often used as liquidity proxies for the Chinese yuan, down.

The Australian dollar fell 0.2% to US$0.6677 and the New Zealand dollar reversed its decline to trade higher 0.1% to US$0.6215.

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Currency bid price at 3:05 PM (19:05 Japan time)

Description RIC Final US Win % YTD % High Bid Low Bid

previous change

session

Dollar Index 101.9700 102.2900 -0.30% -1.469% +102.5600 +101.9700

EUR/USD $1.0997 $1.0969 +0.26% +2.64% +$1.1000 +$1.0944

USD/JPY 141.3050 142.2200 -0.65% +7.77% +142.9950 +141.2950

EUR/JPY 155.39 155.84 -0.29% +10.76% +156.6700 +155.3400

USD/Swiss 0.8855 0.8891 -0.41% -4.24% +0.8918 +0.8854

GBP/USD $1.2855 $1.2841 +0.12% +6.31% +$1.2857 +$1.2751

USD/Canada 1.3280 1.3279 +0.00% -1.99% +1.3304 +1.3269

AUD/USD $0.6676 $0.6693 -0.25% -2.06% +$0.6696 +$0.6624

Euro/Switzerland 0.9738 0.9750 -0.12% -1.59% +0.9762 +0.9739

EUR/GBP 0.8552 0.8541 +0.13% -3.30% +0.8584 +0.8542

New Zealand $0.6215 $0.6209 +0.13% -2.09% +$0.6218 +$0.6167

dollar/dollar

USD/Norway 10.4940 10.6230 -1.02% +7.14% +10.6730 +10.5150

Euro/Norway 11.5389 11.6479 -0.94% +9.96% +11.6920 +11.5383

USD/Sweden 10.7648 10.8193 -0.10% +3.43% +10.8695 +10.7660

EUR/Sweden 11.8386 11.8503 -0.10% +6.14% +11.8985 +11.8380

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