“Dollar near Five-Week High as Inflation and Political Uncertainty Drive Risk-Aversion”

Investing.com – The U.S. dollar traded lower during European morning trade on Monday (15th), but remained near five-week highs, as inflation concerns reignited, while the Turkish lira fell amid political uncertainty.

As of 17:18 Beijing time (05:18 am ET), the dollar, which measures the dollar’s trade-weighted strength against six major currencies, was down 0.05% at 102.455. For the first time since March 10.

The benchmark U.S. Treasury yield was at 3.476%, at 3.8918%.

Last week, it raised interest rates for the 10th time in a row, but suggested that the most aggressive round of tightening in 40 years may be about to be suspended to assess the impact of tightening policies on the economy.

Earlier data also showed an annual rate of 4.9%, down from 5% in March, but still well above the Fed’s 2% target, suggesting inflation remains sticky, while a survey of U.S. consumers’ long-term inflation expectations also jumped. rose to the highest level since 2011.

Federal Reserve Governor Bowman (Michelle Bowman) said on Friday (12th) that if inflation remains high, the US central bank may need to raise interest rates further.

“If inflation remains elevated and the labor market remains tight, additional monetary policy tightening may be appropriate to bring the restrictive stance of monetary policy to a level sufficient to continue reducing inflation,” Bowman said.

On the other hand, due to concerns about debt default, the dollar is supported by safe-haven attributes, and the parties in the United States have made no progress on raising the debt ceiling.

Key players, including U.S. President Joe Biden and House Speaker Kevin McCarthy, are likely to resume meetings early this week to discuss the debt ceiling.

ING analysts said: “We continue to think that investors are eyeing with concern a scenario that ultimately requires an adverse market reaction to break the impasse, and that the lack of any progress towards a deal will certainly continue Some support for the dollar.”

Also, the Turkish lira fell to a two-month low. It rose 0.51% to 19.6595 after the presidential election held over the weekend failed to decide the outcome. Neither the incumbent President Recep Tayyip Erdogan nor his opponent Kemal Kilicdaroglu received more than 50% of the votes, while Turkey will The second round of elections will be held on May 28, and the two will face off again, so Turkey will continue to be shrouded in general election uncertainty for the next two weeks.

It rose 0.12 percent to 1.0861, having earlier fallen to 1.0845, a five-week low. The euro zone will release first-quarter data on Tuesday, with economists expecting the bloc’s economy to grow just 0.1 percent in the three months to March.

Up 0.22 percent to 1.2485. It rose 0.34% to 136.18 and rose 0.54% to 0.6682.

It fell 0.04% to 6.9552; fell 0.10% to 6.9639, after the yuan fell to a two-month low earlier. Reported at 2.738%.

The People’s Bank of China released the first-quarter monetary policy implementation report in the afternoon of the Asian session. The report stated that we should give full play to the effectiveness of monetary and credit policies, and do our best to stabilize growth, employment, and prices.

[This article is from Yingwei Caiqing Investing.com, to read more, please log in to cn.investing.com or download Yingwei Caiqing App]

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Compiler: Liu Chuan