2023-07-12 16:12:00
The dollar index hit a 14-month low, sending ripples through foreign exchange markets. There is awareness of the impact of slowing US inflation on the most aggressive monetary tightening in decades.
The Swiss franc hits its highest level once morest the dollar since 2015. The yen rose regarding 1.5% to the 138 yen level once morest the dollar. The euro broke through 1 euro = 1.10 dollars, and the pound temporarily touched 1.30 dollars, both reaching the highest level in regarding a year.
“It adds extra life to the idea that the Fed is nearing the end of the rate hike cycle,” said Bipan Lai, head of FX strategy at Canadian Imperial Bank of Commerce (CIBC). “You can’t say that for some other major central banks, which is a strong signal of a weaker dollar,” he said.
US Data Weighs on Dollar, Sending Currencies Soaring
Source: Bloomberg
Core CPI, which excludes volatile food and energy, rose 4.8% from a year earlier in June, the weakest increase since late 2021.
U.S. CPI sharply slows down in June – raises expectations that interest rate hikes will come to an end soon (3)
As a result, the Bloomberg Dollar Spot Index fell to its lowest level since April 2022. U.S. Treasury yields also fell.
The Canadian dollar also rose today. The Bank of Canada (Central Bank) raised its policy rate for the second consecutive meeting. The central bank has revised up its growth forecast but said it will hit its inflation target later than previously expected.
Bank of Canada raises rate by 0.25 points, policy rate to 5%-expects prolonged inflation
“Disinflation is the theme right now, and that’s the trade,” said Jordan Rochester, a strategist at Nomura International. As for the trajectory of the U.S. interest rate hikes going forward, he said, “There is a high possibility that the view that the Fed will raise interest rates further in July and that’s the end of it will gain more credibility on Wall Street.”
Original title:Dollar’s Slump Sends Franc and Pound Surging Amid Fed Rethink(excerpt)
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