{"id":12469,"date":"2023-05-23T04:57:06","date_gmt":"2023-05-23T08:57:06","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/forex\/dollar-inches-higher-on-fed-rate-expectations-hits-6-month-peak-vs-yen\/"},"modified":"2023-05-23T04:57:07","modified_gmt":"2023-05-23T08:57:07","slug":"dollar-inches-higher-on-fed-rate-expectations-hits-6-month-peak-vs-yen","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=12469","title":{"rendered":"Dollar inches higher on Fed rate expectations, hits 6-month peak vs yen"},"content":{"rendered":"
\n

By Samuel Indyk and Rae Wee<\/p>\n

LONDON (Reuters) – The U.S. dollar inched higher for a second day on Tuesday – touching a six-month peak against Japan’s yen – on expectations that U.S. rates will remain higher for longer, while ongoing debt ceiling negotiations kept investors on edge. <\/p>\n

Among a slew of Federal Reserve heavyweights who spoke on Monday, some hinted that the central bank had further to go in tightening monetary policy. <\/p>\n

Minneapolis Fed President Neel Kashkari said that U.S. rates may have to go “north of 6%” for inflation to return to the Fed’s 2% target, while St. Louis Fed President James Bullard said the central bank may still need to raise another half-point this year.<\/p>\n

Against the Japanese yen, the greenback rose to a near six-month peak of 138.88 in Asia trade. The dollar was last 0.1% lower at 138.445 yen.<\/p>\n

With U.S. policymakers sounding a preference for higher rates, traders ramped up bets that the Fed funds rate will stay elevated, with markets pricing in around a 20% chance of a rate hike in June and the Fed funds rate seen at about 4.7% in December.<\/p>\n

“Hawkish Fed comments have lifted rate hike expectations and that is one reason why the dollar is firmer across the board,” said Niels Christensen, chief analyst at Nordea. <\/p>\n

The euro slipped 0.2% to $1.0795 and is down around 2% for the month thus far against a stronger dollar, reversing two straight months of gains. <\/p>\n

Euro zone business growth slowed slightly more than thought but remained resilient this month as the bloc’s dominant services industry lost a little of its shine and the downturn in the manufacturing sector deepened, a survey showed on Tuesday. <\/p>\n

Sterling was down 0.3% at $1.24.<\/p>\n

Flash PMI figures from the UK and United States are due later on Tuesday. <\/p>\n

‘X-DATE’ LOOMS<\/p>\n

Also on investors’ minds were concerns over a looming debt ceiling deadline in the United States, which put a lid on risk sentiment and supported the safe-haven U.S. dollar.<\/p>\n

President Joe Biden and House Speaker Kevin McCarthy ended discussions on Monday with no agreement on how to raise the U.S. government’s $31.4 trillion debt ceiling and will keep talking with just 10 days before a possible default.<\/p>\n

“Markets are still expecting some sort of deal to be reached,” Nordea’s Christensen said.<\/p>\n

“An agreement should spark some more risk-on sentiment which could be negative for the dollar,” he added. <\/p>\n

Short-end U.S. Treasury yields have jumped still, reflecting market jitters, with the yield on the one-month Treasury bill last at 5.881%. Yields rise when bond prices fall.<\/p>\n

The yield on the two-month Treasury bill rose to a roughly three-week high of 5.556%. <\/p>\n

Against a basket of currencies, the U.S. dollar rose 0.1% to 103.41, not far from a roughly two-month high of 103.63 hit last week.<\/p>\n

The slipped 0.4% to $0.6625, while the fell 0.4% to $0.6258.<\/p>\n

The resilient dollar kept the pinned near its recent five-month low and it last bought 7.0661.<\/p>\n

China on Monday kept its benchmark lending rates unchanged, as a weakening yuan and widening yield differentials with the U.S. limited the scope for any substantial monetary easing to shore up the country’s post-COVID economic recovery. <\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By Samuel Indyk and Rae Wee LONDON (Reuters) – The U.S. dollar inched higher for a second day on Tuesday – touching a six-month peak against Japan’s yen – on expectations that U.S. rates will remain higher for longer, while ongoing debt ceiling negotiations kept investors on edge. Among a slew of Federal Reserve heavyweights […]<\/p>\n","protected":false},"author":1,"featured_media":988,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[244],"tags":[83],"class_list":["post-12469","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-forex","tag-featured"],"yoast_head":"\nDollar inches higher on Fed rate expectations, hits 6-month peak vs yen | iFintechWorld<\/title>\n<meta name=\"description\" content=\"By Samuel Indyk and Rae Wee LONDON (Reuters) - The U.S. dollar inched higher for a second day on Tuesday - touching a six-month peak against Japan's yen -\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=12469\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Dollar inches higher on Fed rate expectations, hits 6-month peak vs yen | iFintechWorld\" \/>\n<meta property=\"og:description\" content=\"By Samuel Indyk and Rae Wee LONDON (Reuters) - 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