The dollar is getting cheaper against the euro and the pound sterling and is getting stronger against the yen.
Signals of a weakening U.S. economy and recent comments from Federal Reserve (Fed) leaders give investors hope that the U.S. Central Bank will continue to slow the pace of raising the benchmark interest rate.
Federal Reserve Board of Governors member Christopher Waller said last Friday that the central bank has already raised the rate substantially – and “it’s time to slow down, but not stop” its hike.
“I am in favor of a 25 basis point (bps) rate hike at this point in the Fed’s upcoming meeting,” Waller said during a speech at the U.S. Council on Foreign Relations.
“We still have a long way to go to get inflation back to the 2% target, and I believe I will support further tightening of monetary policy,” Waller was quoted by Market Watch.
Federal Reserve Bank of Kansas City (FRB) President Esther George told Bloomberg TV that while inflation has slowed, it is still well above the target.
“To stay true to our price stability mandate, we need to be a little more patient,” she said.
In December, the Fed increased the rate by 50 bps. – To 4,25-4,5% per annum after its rise by 75 bp at the end of the previous four meetings, and the market is waiting for a further slowdown in policy tightening, taking into account signals of weakening inflation and economic activity in the U.S.
The European Central Bank (ECB) may have to continue raising the rate at a rate of 50 bp in both February and March, ECB Governing Council member and Dutch central bank governor Klaas Knott told the Dutch broadcaster WNL. According to Knott, the rate hike will continue in the coming months.
In a separate interview he gave to the Italian newspaper La Stampa, Knott said that it was “too early” to talk about the possibility of a slowdown in the ECB’s rate increases by the summer.
The ECB raised key interest rates by a total of 250 bps last year. Experts polled by Bloomberg expect the ECB’s deposit rate, currently at 2 percent, to eventually rise to 3.25 percent.
The ICE-calculated index showing the dollar’s dynamics against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona) lost 0.22% in trading Monday, while the broader WSJ Dollar Index lost 0.09%.
The euro/dollar pair is trading at $1.0893 as of 8:15 a.m., up from $1.0857 at market close on Friday.
The pound/dollar exchange rate rose to $1.2415 from $1.2394 the day before.
The dollar’s value against the yen is 129.92 yen against 129.5 yen in the previous session.
The U.S. dollar is stable against the euro and getting stronger against the yen and the pound sterling during trading on Friday.
The ICE-calculated index showing the dollar’s dynamics against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona) added 0.07% during trading, while the broader WSJ Dollar Index gained 0.08%.
The euro/dollar pair is trading at $1.0835 as of 7:15 a.m. Ksk, up from $1.0833 at market close Thursday.
The pound/dollar exchange rate fell to $1.2382 from $1.2391 the day before.
Traders continue to follow the statements of U.S. Central Bank executives, who are mostly in favor of further raising the benchmark interest rate, despite signs of a weakening U.S. economy.
European Central Bank (ECB) governor Christine Lagarde also made clear that the regulator has no plans to relax its efforts in the fight to return inflation to target levels.
“Inflation by all measures, from every angle you look at it, is excessively high,” Lagarde said at an economic forum event in Davos. – “We will stick with our current policy course until the point where keeping rates at levels that limit economic activity proves to be long enough to ensure that inflation returns to 2%.
The dollar is at 129.10 yen against the yen at 128.43 yen in the previous session.
The yen was getting cheaper on Friday, correcting after a strong rise the day before, despite data on an acceleration of inflation in the country, raising expectations of changes to the monetary policy by the Bank of Japan.
Consumer prices in Japan excluding fresh food (a key indicator tracked by the country’s central bank) rose 4 percent in December from the same month a year earlier, the fastest pace since December 1981, data from the country’s Ministry of Internal Affairs and Communications showed.
The figure exceeded the Bank of Japan’s 2 percent target for the ninth consecutive month.
Overall inflation in Japan last month was also 4% year on year, accelerating from 3.8% in November. The rate was the fastest since January 1991.
The U.S. dollar is getting stronger against the euro and the pound sterling after declining in the previous session, but it keeps getting cheaper in pair with the yen.
The ICE index showing the dollar’s movement against six currencies (euro, Swiss franc, yen, Canadian dollar, pound and Swedish krone) is gaining 0.16%, while the broader WSJ Dollar Index is 0.12%.
The ICE dollar index fell sharply Thursday after the release of U.S. inflation data, near its lowest level in seven months.
U.S. consumer prices (CPI) rose 6.5% in December compared to the same month last year, the nation’s Labor Department said Thursday. Thus, inflation slowed from 7.1% in November to its lowest level since October 2021. Consumer prices fell 0.1% from the previous month, the first month-over-month decline since 2020.
Traders believe the Federal Reserve (Fed) may slow the pace of prime rate hikes to 25 basis points at its next meeting due to slowing inflation, Trading Economics noted.
The euro/dollar pair is trading at $1.0840 as of 8:00 a.m., up from $1.0854 at the close of the previous session. The pound/dollar exchange rate dipped to $1.2182 during trading on Friday from $1.2212 the day before.
On Thursday, the dollar depreciated by 0.9% against the euro and by 0.5% against the pound.
The value of the American currency in pair with the yen continued to decline on Friday after a 2% decline the day before.
The exchange rate of the dollar fell to 129.19 yen during the trading session, compared to 129.3 yen at the close of the previous one.
JPY was supported by the report of the Japanese newspaper Yomiuri Shimbun that the leaders of the Bank of Japan plan to discuss the unintended consequences of their approach to the monetary-credit policy at the meeting that will be held on January 17-18.
According to the newspaper, the Japanese Central Bank will consider adjustments to monetary policy, including by changing the conditions of the bond purchase program to “reduce its negative impact.
Experts interrogated by Bloomberg expect that the Japanese Central Bank will pass to toughening of monetary policy earlier than it was supposed before.
Almost all respondents of the agency forecast that the Bank of Japan won’t change the main parameters of its policy next week. At the same time 38% of respondents expect its adjustment either in April or in June.
The dollar is getting cheaper against the euro, the yen and the pound sterling in trading on Thursday before the release of inflation data for December in the United States.
The ICE-calculated index showing the dollar’s dynamics against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona) lost 0.15% in trading, while the broader WSJ Dollar Index lost 0.22%.
The euro/dollar pair is trading at $1.0775, compared to $1.0757 at the close of the previous session, as of 7:40 a.m. Ksk.
The U.S. currency pair with the yen dropped to 131.47 yen, compared to 132.49 yen in previous trading.
The exchange rate of the pound to the dollar rose to $1.2167 against $1.2149 the day before.
Thursday traders’ attention was fixed on the report of the U.S. Department of Labor on the last month’s dynamics of consumer prices in the country. The consensus forecast from experts polled by Trading Economics suggests that inflation in the U.S. slowed to 6.5% in December from 7.1% in November. The data will be released at 4:30 p.m. Moscow time.
Signals of weakening consumer price growth in the U.S. speak in favor of a further slowdown in the Federal Reserve’s (Fed’s) tightening of monetary policy.
Meanwhile, U.S. central bankers aren’t in a hurry to abandon their hawkish stance: earlier this week, Mary Daley, president of the Federal Reserve Bank (Fed) of San Francisco, said in an interview with The Wall Street Journal that she thinks the Fed will have to raise the rate above 5% to achieve its inflation target.
Her colleague at the Atlanta Fed, Rafael Bostic, also confirmed his earlier opinion that the rate would be raised above 5%. Currently, its range is 4.25-4.5%.
The dollar/yuan pair exchange rate fell to 6.7565 yuan on Thursday against 6.7705 yuan at the close of the previous session.
China’s inflation accelerated to 1.8% year on year in December from 1.6% in November following a rise in food prices.
EURO, pound, U.S. dollar, yen
The U.S. dollar is declining against the euro and the Japanese yen and is rising against the pound sterling in trading on Tuesday.
The ICE-calculated index, which shows the dollar’s movement against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona), is up 0.17% in trading, while the broader WSJ Dollar Index is losing 0.05%.
The euro/dollar pair is trading at $1.0743 as of 7:34 a.m. Ksk on Tuesday, up from $1.0735 at the close of the previous session.
The U.S. currency pair with the yen dropped to 131.74 yen, compared to 131.89 yen in previous trading.
Pound to dollar exchange rate fell to $1.2173 against $1.2185 on Monday.
Investors are inclined to believe that the U.S. Federal Reserve (Fed) may be close to completing its tightening of monetary policy, despite hawkish statements from the regulator’s management.
Mary Daley, head of the Federal Reserve Bank (Fed) of San Francisco, said she believes the U.S. central bank will have to raise the rate above 5% to fight inflation.
Her colleague at the Atlanta Fed, Rafael Bostic, also confirmed his earlier opinion that the rate would be raised to more than 5%. Currently, its range is 4.25-4.5%.
Meanwhile, the easing of anti-coronaval restrictions in China is spurring demand for risky assets.
The Chinese yuan is up 0.1% at 6.7640 yuan/$1 from 6.7725 yuan/$1 the day before.
The ICE-calculated index showing the dollar’s dynamics against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona) is up 0.17% in trading, while the broader WSJ Dollar Index is losing 0.05%.
The euro/dollar pair is trading at $1.0743 as of 7:34 a.m. Ksk on Tuesday, up from $1.0735 at the close of the previous session.
The U.S. currency pair with the yen dropped to 131.74 yen, compared to 131.89 yen in previous trading.
Pound to dollar exchange rate fell to $1.2173 against $1.2185 on Monday.
Investors are inclined to believe that the U.S. Federal Reserve (Fed) may be close to completing its tightening of monetary policy, despite hawkish statements from the regulator’s management.
Mary Daley, head of the Federal Reserve Bank (Fed) of San Francisco, said she believes the U.S. central bank will have to raise the rate above 5% to fight inflation.
Her colleague at the Atlanta Fed, Rafael Bostic, also confirmed his earlier opinion that the rate would be raised to more than 5%. Currently, its range is 4.25-4.5%.
Meanwhile, the easing of anti-coronaval restrictions in China is spurring demand for risky assets.
The Chinese yuan is up 0.1% at 6.7640 yuan/$1 from 6.7725 yuan/$1 the day before.
EURO, pound, U.S. dollar, yen
The U.S. dollar fell against the euro, yen and pound sterling on Monday as fresh signs of a slowdown in U.S. inflation boosted traders’ hopes that the Federal Reserve will be able to halt the cycle of interest rate hikes earlier than expected.
The ICE-calculated index, which shows the dynamics of the dollar against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona), loses 0.29% during trading, the broader WSJ Dollar Index – 0.39%.
As of 7:55 a.m. Monday, the EUR/USD pair is trading at $1.0684, compared to $1.0644 at the close of the previous session.
The value of the American currency against the yen fell to 131.83 yen compared to 132.11 yen in the previous trade.
The pound to dollar rose to $1.2152 against $1.2093 on Friday.
Stats on the US labor market, released last Friday, showed the smallest increase in the number of jobs in the US economy in December since December 2020 – by 223 thousand. Unemployment in the States decreased to 3.5% from 3.6% in November.
At the same time, the average hourly wages in the private sector in December increased by 0.3% compared to the previous month and by 4.6% in annual terms. The growth rate slowed from 0.4% and 4.8% respectively in November and was weaker than analysts’ expectations (0.4% and 5%).
A member of the Board of Governors of the Federal Reserve, Lisa Cook, however, is not too optimistic about the prospects for a slowdown in inflation, according to Market Watch.
“Despite a number of encouraging signals we’ve seen recently, inflation remains excessively high, and that’s a serious concern,” she said during a speech last Friday at the American Economic Association event in New Orleans.
At the same event, the President of the Federal Reserve Bank of Atlanta, Rafael Bostic, said that he sees the need to raise the Fed rate to 5.25%.
“We still have a lot of work to do,” Bostick said.
In December, the American Central Bank increased the interest rate by 50 basis points to 4.25-4.5%
