NEW YORK — The US dollar gained on
Wednesday before the Federal Reserve is due to release minutes
from its July meeting, and the greenback briefly hit a session
high against a basket of currencies after data showed that US
Consumer spending was steady in July.
Bets that the US central bank will continue to hike rates
aggressively to battle inflation have increased since last week,
when softer-than-expected inflation in July raised some hopes
that price pressures might have passed.
Fed officials are adamant they will keep raising interest
rates until high inflation is under control, and the release on
Wednesday of the minutes from their July 26-27 policy meeting
may shed light on just how aggressive they expect to be.
“Everyone is focused on – well, will we really see the Fed
be in a position where they need to deliver more massive rate
hikes and can the economy handle it, and right now the economy
looks like it can,” said Edward Moya, senior market analyst at
OANDA in New York.
US retail sales were unchanged in July as declining
gasoline prices weighed on receipts at service stations but
consumer spending appeared to hold up, which could further
Assuage fears that the economy was already in recession.
Looser financial conditions as benchmark 10-year Treasury
yields hold below 3% and as the credit and stocks markets
improve has also increased speculation the Fed may need to be
more aggressive in hiking rates to make an impact.
Fed funds futures traders are currently pricing in a 48%
chance of a 50 basis points increase and a 52% probability of a
75 basis points hike.
The dollar index against a basket of currencies was up 0.27%
on the day at 106.76. The euro fell 0.10% against the
dollar to $1.0161.
The greenback gained 0.67% against the yen to 135.16.
The dollar is being helped by expectations that the Fed will
continue to hike rates at a faster pace then peers.
The euro is also being weighed down by economic concerns as
the region faces an energy crisis caused by Western sanctions on
Russia as a result of its invasion of Ukraine.
The New Zealand dollar fell 0.87%, erasing earlier
gains in volatile trading on what was likely profit taking on
the original move.
New Zealand’s central bank on Wednesday delivered its
seventh straight interest rate hike and signaled a more hawkish
tightening path over coming months to rein in stubbornly high
inflation, which briefly boosted the currency.
Sterling also faded after an initial jump on data showing
that consumer price inflation in Britain rose to 10.1% in July,
the highest since February 1982.
The British pound was last down 0.23% on the day at
Currency bid prices at 9:34AM (1334 GMT)
Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid
Dollar index 106.7600 106.4800 +0.27% 11.600% +106.8900 +106.3000
Euro/Dollar $1.0161 $1.0172 -0.10% -10.62% +$1.0187 +$1.0146
Dollar/Yen 135.1600 134.2550 +0.67% +17.41% +135.3800 +133.9100
Euro/Yen 137.34 136.50 +0.62% +5.39% +137.4600 +136.2700
Dollar/Swiss 0.9527 0.9497 +0.32% +4.45% +0.9538 +0.9485
Sterling/Dollar $1.2061 $1.2098 -0.23% -10.75% +$1.2143 +$1.2051
Dollar/Canadian 1.2919 1.2846 +0.59% +2.20% +1.2921 +1.2828
Aussie/Dollar $0.6932 $0.7024 -1.30% -4.63% +$0.7026 +$0.6918
Euro/Swiss 0.9679 0.9656 +0.24% -6.65% +0.9687 +0.9652
Euro/Sterling 0.8422 0.8408 +0.17% +0.26% +0.8426 +0.8390
NZ $0.6283 $0.6343 -0.87% -8.13% +$0.6383 +$0.6275
Dollar/Norway 9.7335 9.6770 +0.58% +10.48% +9.7340 +9.6625
Euro/Norway 9.8935 9.8293 +0.65% -1.19% +9.9017 +9.8215
Dollar/Sweden 10.4051 10.3332 +0.59% +15.38% +10.4123 +10.3154
Euro/Sweden 10.5735 10.5117 +0.59% +3.32% +10.5785 +10.5050
(Additional reporting by Iain Withers in London
Editing by Mark Potter)