The dollar climbs slightly, on track for a third straight day of gains
By Chuck Mikolajczak
NEW YORK (Reuters) – The dollar rose slightly against a basket of major currencies on Friday, putting it on track for a third straight day of gains, as crude prices reversed earlier weakness and added pressure for that the Federal Reserve be aggressive in the fight against inflation.
After initially declining, oil prices rebounded following a missile attack on the storage facilities of Saudi state oil company Aramco.
The war in Ukraine and the resulting rise in commodity prices added upward pressure to already high inflation.
The dollar index rose 0.071%, with the euro falling 0.11% to $1.0984.
The greenback is poised for a solid gain this week, which would mark its sixth weekly gain in the past seven. The dollar benefited from its safe haven status and the conflict in Ukraine fueled expectations of an interest rate hike by the Fed.
“The one thing everyone can agree on is that inflation is going to last longer and a lot of it will be sticky and that will complicate what central banks do in the end,” said Edward Moya, senior market analyst at Oanda in New York. York.
“You will likely see the dollar leading the charge with rate hikes, Europe will lag behind and this interest rate differential should provide some support for the dollar.”
Joining other analysts who have raised expectations for a more aggressive Fed, Bank of America said Friday it expects two hikes of 50 basis points each in its June and July meetings with “risks.” that these be postponed to May and June respectively.
Citi also revised its Fed policy path upward for rate hikes, expecting 50 basis point hikes at meetings in May, June, July and September this year.
Economic data indicated rising prices and interest rates beginning to dampen some economic activity.
Contracts to purchase previously owned U.S. homes fell to their lowest level in nearly two years in February, while consumer confidence was partly shaken by rising gasoline prices, which propelled inflation expectations at their highest level since 1981.
The euro gave up early gains and weakened, and was on course for its sixth weekly decline in seven, although concerns over an economic slowdown were likely to keep it in a tight range.
German business morale deteriorated in March due to worsening supply chain problems stemming from high gasoline prices and a shortage of drivers, according to a survey released on Friday.
The Japanese yen strengthened 0.21% against the greenback to 122.07 per dollar after hitting a new low at 122.43, the weakest in more than six years, while the British pound last traded at $1.3187, up 0.03% on the day.
The yen came under pressure as the Bank of Japan had to keep its monetary policy loose, unlike most other central banks around the world.
In cryptocurrencies, Bitcoin last rose 1.24% to $44,448.50.
(Reporting by Chuck Mikolajczak; editing by Barbara Lewis and Jonathan Oatis)
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