Dollar Holds Near 14-Month High Against Euro Amid Inflation Fears

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One hundred US dollar bills can be seen in this photo taken in Seoul on February 7, 2011. REUTERS / Lee Jae-Won / File Photo

TOKYO, Oct. 7 (Reuters) – The safe-haven dollar held on Thursday at a 14-month high against the euro, as surging energy prices fueled fears that inflation could dampen economic growth while prompting the Federal Reserve to act sooner to normalize policy.

The US currency remained stable 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 from Wednesday, after rising nearly 0.5% in the past two sessions. The index hit a one-year high at 94.504 last week.

The Japanese yen, another safe haven, was broadly flat at 111.375 per dollar, near the midpoint of its range of the last week and a half.

Overnight, crude oil hit a seven-year high before pausing after its recent sizzling gains, while natural gas hit a record high in Europe and coal prices from major exporters also hit. historic peaks. Read more

“All the talk on (trading) floors, on social media and in large markets revolved around Nat Gas, and it was deafening,” wrote Chris Weston, head of research at broker Pepperstone in Melbourne. , in a customer note entitled “OMGas”.

“Traders were concerned that the risks of stagflation were in motion and wondered how the heck do central banks handle a stagflation event caused by a supply shock? “

Investors have also remained on the alert over negotiations over the US debt ceiling, even as senior US Senate Republican Mitch McConnell has said his party will allow an extension of the federal debt ceiling until in December, a decision that would avoid a historic default with a heavy economic toll. Read more

The Federal Reserve, which has so far mainly argued that inflationary pressures will be transient, has said it will likely start cutting its monthly bond purchases as early as November, before following up with interest rate hikes. Read more

Jobs have been the Fed’s other main focus, and Friday’s non-farm payroll report may provide further clues as to the timing of the Fed’s next moves.

Economists expect continued improvement in the labor market, with a consensus forecast of 473,000 jobs created in September, according to a Reuters poll.

U.S. private sector payrolls grew more than expected in September, as COVID-19 infections began to decline, allowing Americans to travel, eat out, and re-engage in other high-touch activities ADP’s national employment report showed Wednesday. Read more

Meanwhile, bitcoin, the world’s largest cryptocurrency by market value, hovered near a nearly five-month high of $ 55,800 hit on Wednesday, last trading around $ 54,881. .

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Price of currency offers at 0114 GMT

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Reporting by Kevin Buckland; Editing by Muralikumar Anantharaman

Our Standards: Thomson Reuters Trust Principles.


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