Dollar climbs as Fed set for lengthy inflation fight

Dollar climbs as Fed set for lengthy inflation fight

18 Aug    Finance News

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SINGAPORE/HONG KONG — The dollar climbed

to a three-week high on Thursday after minutes from the Federal

Reserve’s July meeting pointed to U.S. interest rates staying

higher for longer to bring down inflation.

Sterling briefly dropped below the $1.2 level to a

three-week low, thanks to the stronger dollar, and also

suffering from red hot inflation figures released the day before

which reinforced fears about the U.K. growth outlook.

The pound was last down 0.3% at $1.2015, while the euro

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shed 0.2% to $1.0157 and the dollar climbed a touch on

the yen to trade at 135.25 yen, just off its overnight

one week high.

This left the dollar index up 0.22% at 106.89, its

highest since late July.

“The bigger picture for the dollar is that it’s in a strong

uptrend,” said Matt Simpson, a senior analyst at brokerage City

Index in Brisbane, adding it has now paused a weeks-long

pullback

“In some ways, bulls are looking to step back in and I think

the Fed minutes gave them a reason to do so.”

Fed officials saw “little evidence” late last month that

U.S. inflation pressures were easing, minutes released on

Wednesday showed. The minutes flagged an eventual slowdown in

the pace of hikes, but not a switch to cuts in 2023 that traders

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until recently had priced in to interest-rate futures.

Traders see about a 40% chance of a third consecutive 75

basis point Fed rate hike in September, and expect rates to hit

a peak around 3.7% by March, and to hover around there until

later in 2023.

In Asian trade the greenback gained most against the

Antipodeans, especially the Aussie, which was dragged down as

weaker-than-expected wage growth weighed on Australia’s rates

outlook.

The Australian dollar fell to a one-week low of

$0.6899, before bouncing back to $0.6916, down 0.3%, following

noisy labor data that showed falls in both employment and the

jobless rate.

The New Zealand dollar was also pinned to Wednesday

lows and was last down 0.35% at $0.6258.

China’s yuan, meanwhile, continued to struggle as

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weak consumption, low confidence, anemic credit growth, a

property crisis and restrictive COVID-19 policies have cast a

long shadow over the prospects for the world’s second-largest

economy.

The yuan fell about 0.2% to 6.793 per dollar.

It also dropped below its 200-day moving average against the

euro.

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

Currency bid prices at 0731 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.0158 $1.0178 -0.19% -10.65% +1.0193 +1.0146

Dollar/Yen 135.2350 134.9950 +0.13% +17.52% +135.4200 +134.8000

Euro/Yen

Dollar/Swiss 0.9533 0.9519 +0.17% +4.53% +0.9540 +0.9501

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Sterling/Dollar 1.2021 1.2050 -0.22% -11.10% +1.2060 +1.1995

Dollar/Canadian 1.2929 1.2915 +0.10% +2.25% +1.2946 +1.2914

Aussie/Dollar 0.6922 0.6937 -0.26% -4.81% +0.6950 +0.6899

NZ 0.6261 0.6281 -0.33% -8.54% +0.6286 +0.6248

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Tom Westbrook and Alun John ; editing by Richard

Pullin, Sam Holmes and Kim Coghill)

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