Monday, September 26

Dollar gains before Fed meeting minutes


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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.

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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.

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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

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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

$1.2061.

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Currency bid prices at 9:34AM (1334 GMT)

Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

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/Dollar

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)

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