Voice Cyprus News
EconomyFeatured

Dollar hits highest since mid-March as European inflation cools


 

The US dollar rose strongly on Wednesday to a more than two-month high after data showed European inflation is cooling quicker than expected and China’s recovery is sputtering.

The euro fell to $1.066 earlier in the session, the lowest since March 20. It was last down 0.54 per cent at $1.068.

That helped the dollar index , which measures the greenback against six major peers, climb to 104.63, its highest since March 16. It was last up 0.43 per cent at 104.5.

Data on Wednesday showed inflation in France and some of Germany’s biggest states is slowing quickly. Analysts said the figures reduced the pressure on the European Central Bank (ECB) to keep raising interest rates, diminishing the euro’s attractiveness relative to the dollar.

In France, inflation cooled in May to its lowest level in a year as energy and food price increases moderated. Euro zone-wide inflation data is due out tomorrow.

“European inflation is rolling back now and you’re taking back some of the previously anticipated hikes from the ECB,” said Carl Hammer, chief strategist at European bank SEB.

Hammer also said the probable resolution of the US debt ceiling standoff was supporting US stocks and likely helping the dollar.

Weak economic data out of China also boosted the US currency, analysts said. A survey released on Wednesday showed that China’s factory activity shrank faster than expected in May, in the latest sign that the country’s recovery from COVID-19 lockdowns is faltering.

China’s yuan fell to its lowest since November at 7.133 per dollar.

Australia’s dollar also fell to its lowest since mid-November at $0.648.

“All else being equal, a weak China is a positive for the US dollar, and to some extent the yen, against the euro or the Aussie,” said Shusuke Yamada, chief FX and rates strategist at Bank of America in Tokyo.

In a busy day in currency markets, the Japanese yen bounced around against the dollar.

The dollar rose to a six-month peak of 140.93 on Tuesday but then fell sharply after Japan’s top currency diplomat said officials “will closely watch currency market moves and respond appropriately as needed”.

It initially continued that fall on Wednesday but rebounded and was last up 0.15 per cent at 139.98 yen.

“I think the real line in the sand is 150,” said Bart Wakabayashi, general manager at State Street in Tokyo.

“If we get above 145, we’re going to see pretty much every Japanese official on the wires trying to talk it down, and if they don’t like what they see, they’re going to act,” he said, referring to the risk of currency intervention.

Sterling was last down 0.4 per cent to $1.236.

The Turkish lira sank to a record low of 20.75 per dollar after President Tayyip Erdogan extended his two decades in power in Sunday’s election.

( Source Reuters)

Read This:  China launches new military drills near Taiwan

Related posts

Windcraft Music Fest 9 ready to take off

Voice Cyprus News

Kerala starts mass testing after outbreak in India

Voice Cyprus News

Showers expected today!

Voice Cyprus News

Türkiye continues efforts to secure international recognition for Northern Cyprus: Turkish Foreign Minister

Voice Cyprus News

TC leader Tatar meets with UN Under-Secretary-General Lacroix

Voice Cyprus News

North Cyprus Night-Pharmacies (28th June 2024)

Voice Cyprus News