“Dollar Rises on Federal Statements and High Bond Yields: Latest Updates and Analysis”

Investing.com – The US dollar index is now up 0.40% to 103.495 against a basket of foreign currencies, coinciding with a collective rise in yields, a day after selling 6-month Treasury notes, yielding 5.25%, the highest yield since 2001.

A member of the Federal Reserve, Neil Kashkari, said moments ago that if inflation remains high, it is inevitable to raise interest rates. He added that if the United States faces a quiet recession, it is expected that this will contribute to reducing inflation.

dollars this morning

The US dollar rallied in early European trade on Tuesday, as risk sentiment weakened amid the debt ceiling crisis and hawkish comments from Federal Reserve officials.

At 02:55 ET (06:55 GMT), the cryptocurrency, which tracks the greenback against a basket of six other currencies, rose to 103.140, not far from its two-month high of 103.63 last week.

Debt ceiling crisis..positive?

US President Joe Biden and House Speaker Kevin McCarthy ended discussions late Monday with no agreement on how to raise the US government’s $31.4 trillion debt ceiling.

US Treasury Secretary Janet Yellen also added to the importance of the situation by saying that it is now “highly likely” that her department will run out of sufficient cash in early June.

With less than two weeks left before the first ever possible US government default would roil financial markets, the dollar, which often acts as a safe haven in times of stress, saw some demand.

How does the Fed support the dollar?

The dollar also saw some kind of boost after comments from central bank officials which indicated that a rate hike in June is still a viable option.

While James Bullard, president of the St. Louis Federal Reserve and a known hardliner, has backed two more rate hikes this year in order to tame inflation, his Minneapolis colleague Neel Kashkari said the central bank should signal next month that the tightening is far from over. . If it stops next month.

The Fed chairman hinted at a pause in the June central bank meeting during a conference call on Friday, but he may still have to convince a number of his colleagues.

Dollar and other foreign currencies

It fell 0.1% to 138.52, after earlier climbing to a near six-month high in Asian trade, reflecting the stark contrast between the still hawkish Fed and the hawkish Fed.

However, the yen benefited from data showing that it grew unexpectedly in May, while growth was at a record level.

It was trading pretty flat at 1.0813 ahead of the release of May’s preliminary data for the Eurozone, which is expected to show a strong service sector supporting lackluster manufacturing results.

European Central Bank policy maker Pablo Hernandez de Cos said on Monday that it still needs to raise interest rates further to bring inflation down to its medium-term target of 2%.

It fell 0.1% to 1.2426, with surprise figures also expected in the UK, while the risk sensitive was largely trading flat at 0.6653 even on a sign of some resilience in the economy.

While the rate rose 0.2% to 7.0463, with the yuan trading near its lowest level in six months against the dollar amid continuing uncertainty about the slowdown in the economic recovery in the country.

The rate also rose 0.2% to 346.43 ahead of a policy-setting meeting by the Hungarian central bank, which could lead to a key interest rate cut for the first time in three years.

The EU, which oversees the highest borrowing costs in the European Union, is expected to cut its overnight rate by a full percentage point to 17% later on Tuesday.