U.S. dollar advances as inflation data affirms Fed rate hike next week

U.S. dollar advances as inflation data affirms Fed rate hike next week

28 Apr    Finance News, PMN Business, REU

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NEW YORK — The U.S. dollar rose on Friday after data showed inflation grew in

March, though at a slower pace, keeping the Federal Reserve still firmly on track to raise interest rates at

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next week’s monetary policy meeting.

The dollar index, a measure of the greenback’s value against six major currencies, rose 0.7% to 102.10

. Against the yen, the U.S. currency rose 1.5% to 136.07 yen.

The euro, meanwhile, fell 0.4% against the dollar to $1.0984

Friday’s data showed the personal consumption expenditures (PCE) price index edged 0.1% higher in March

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after rising 0.3% in February. In the 12 months through March, the PCE price index increased 4.2% after

climbing 5.1% in February.

Excluding the volatile food and energy components, the PCE price index inched up 0.3% after

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increasing at the same rate in February. The so-called core PCE price index gained 4.6% on a year-on-year

basis in March after rising 4.7% in February. The Fed tracks the PCE price indexes for its 2% inflation

target.

“It’s another mixed bag of data, but what stands out is the frustratingly slow descent in core

inflation,” said Joe Manimbo, senior market analyst at Convera in Washington.

“So, the dollar’s benefiting from elevated core inflation, which I think is leading the market to

rethink the outlook for rate cuts later this year and I think it sets the stage for the Fed to reiterate

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that interest rates are likely to remain higher for longer.”

Following the data, the rate futures market has priced in a 90% chance of a 25 basis-point hike next

week.

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

Currency bid prices at 8:55AM (1255 GMT)

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

Previous Change

Session

Dollar index 101.9800 101.4500 +0.53% -1.459% +102.1700 +101.4200

Euro/Dollar $1.0984 $1.1029 -0.41% +2.51% +$1.1040 +$1.0963

Dollar/Yen 136.0800 134.0100 +1.56% +3.81% +136.4000 +133.3600

Euro/Yen 149.38 147.77 +1.09% +6.47% +149.5300 +147.2300

Dollar/Swiss 0.8949 0.8944 +0.07% -3.21% +0.8975 +0.8930

Sterling/Dollar $1.2489 $1.2500 -0.10% +3.25% +$1.2504 +$1.2447

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Dollar/Canadian 1.3635 1.3591 +0.33% +0.64% +1.3668 +1.3592

Aussie/Dollar $0.6585 $0.6630 -0.67% -3.39% +$0.6642 +$0.6573

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Euro/Swiss 0.9828 0.9862 -0.34% -0.68% +0.9868 +0.9827

Euro/Sterling 0.8793 0.8824 -0.35% -0.58% +0.8839 +0.8794

NZ $0.6148 $0.6148 +0.00% -3.18% +$0.6159 +$0.6124

Dollar/Dollar

Dollar/Norway 10.7340 10.6210 +1.14% +9.46% +10.7690 +10.6290

Euro/Norway 11.7920 11.7106 +0.70% +12.37% +11.8338 +11.6981

Dollar/Sweden 10.3314 10.2857 -0.04% -0.74% +10.3522 +10.2748

Euro/Sweden 11.3486 11.3530 -0.04% +1.78% +11.3720 +11.3029

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Karen Brettell; Editing by Andrew Heavens

and Andrea Ricci)

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