Thursday, October 28

Dollar holds near 14-month high to euro on inflation fears


Article content

TOKYO — The safe-haven dollar held close to

a 14-month high against the euro on Thursday as a surge in

energy prices fueled worries that inflation could crimp

economic growth while also prodding the Federal Reserve to act

sooner to normalize policy.

The US currency was steady at $1.1558 per euro

after strengthening to $1.1529 on Wednesday for the first time

since July of last year.

The dollar index, which measures the greenback

against a basket of six rivals, was little changed at 94.188

Advertisement

Article content

from Wednesday, following a nearly 0.5% climb over the past two

sessions. The index hit a one-year high of 94.504 last week.

The Japanese yen, another safe haven, was mostly

flat at 111.375 per dollar, near the middle of its range of the

past week and a half.

Overnight, crude oil rallied to a seven-year high before

taking a breather from its recent torrid gains, while natural

gas jumped to a record peak in Europe and coal prices from major

exporters also hit all-time highs.

“All the talk on the (trading) floors, on social media and

through broad markets has been around Nat Gas, and it was

deafening,” Chris Weston, head of research at broker Pepperstone

in Melbourne, wrote in a client note titled “OMGas.”

“Traders feared stagflation risks were on the march and

Advertisement

Article content

questioned how on earth do central banks deal with a stagflation

event driven by a supply shock?”

Investors also remained on edge regarding US debt ceiling

negotiations, even as the top US Senate Republican Mitch

McConnell said his party would allow an extension of the federal

debt ceiling into December, a move that would head off a

historic default with a heavy economic toll.

The Federal Reserve, which has till now mainly contended

that inflationary pressures will prove transitory, has said it

is likely to begin reducing its monthly bond purchases as soon

as November, before following up with interest rate

increases.

Employment has been the Fed’s other main focus, and the

closely watched non-farm payrolls report on Friday could provide

Advertisement

Article content

additional clues to the timing of the Fed’s next moves.

Economists expect continued improvement in the labor market,

with a consensus forecast for 473,000 jobs to have been added in

September, a Reuters poll showed.

US private payrolls increased more than expected in

September as COVID-19 infections started subsiding, allowing

Americans to travel, frequent restaurants and reengage in other

high-contact activities, the ADP National Employment Report

showed on Wednesday.

Meanwhile, bitcoin, the world’s biggest

cryptocurrency by market value, hovered near an almost

five-month high of $55,800 touched on Wednesday, last trading

around $54,881.

================================================== ======

Advertisement

Article content

Currency bid prices at 0114 GMT

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

Previous Change

Session

Euro/Dollar $1.1554 $1.1557 -0.02% -5.43% +1.1561 +1.1551

Dollar/Yen 111.4250 111.3800 -0.01% +7.82% +111.4400 +111.3650

Euro/Yen

Dollar/Swiss 0.9283 0.9273 +0.08% +4.89% +0.9283 +0.9275

Sterling/Dollar 1.3587 1.3580 +0.06% -0.54% +1.3596 +1.3587

Dollar/Canadian 1.2583 1.2591 -0.05% -1.17% +1.2593 +1.2572

Aussie/Dollar 0.7282 0.7273 +0.12% -5.34% +0.7287 +0.7269

NZ 0.6914 0.6916 +0.00% -3.69% +0.6920 +0.6912

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Kevin Buckland; Editing by Muralikumar

Anantharaman)

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.



financialpost.com

Leave a Reply

Your email address will not be published. Required fields are marked *