Dollar retreats as Fed signals charge-hike cycle nearing its stop

Buck dives to 2-month low, pound scales 15-month peaks on wage growth data

© Reuters. FILE PHOTO: U.S. dollars are counted out by a banker counting forex at a monetary institution in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking/File Listing
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By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) - The buck declined to a two-month low against a serious forex index on Tuesday after Federal Reserve officials signaled that the U.S. central monetary institution is shut to the cease of its tightening cycle, whereas sterling hit a 15-month excessive after pay growth exceeded expectations.

In opposition to the yen, the buck fell to a four-week trough of 140.17. It ultimate traded down 0.7% at 140.385 yen. The U.S. forex moreover plunged to its lowest in 2-1/2 years versus the Swiss franc, and became once ultimate at 0.8797 francs, down 0.6%.

A total lot of Fed officials stated on Monday the central monetary institution would seemingly want to raise curiosity rates extra to bring down inflation however the cease to its recent monetary policy tightening cycle became once getting shut.

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The feedback knocked the buck to a two-month low of 101.66 against a basket of currencies, as merchants pared abet their expectations about how powerful extra U.S. rates might maybe merely want to upward thrust. The buck index became once ultimate down 0.3% at 101.65.

"Friday's NFP (nonfarm payrolls) document printed, for the principle time since COVID, seemingly cracks within the U.S. labor market, hinting that the Fed might maybe merely want to pick out on fair trusty a single rate hike within the 2nd half of of the 365 days," stated Matt Weller, world head of research at International and City Index.

The June non-farm payrolls document showed the fewest job gains in 2-1/2 years.

"In the period in-between, (Tuesday) morning's solid UK wage growth data and the ongoing short squeeze within the Jap yen are using two of the buck's ultimate rivals better as merchants anxiously sit up for (Wednesday's) U.S. CPI document," Weller added.

Expectations are for core U.S. client costs to possess risen 5% on an annual foundation in June. The CPI data ought to provide extra clarity on the Fed's growth in its fight against stubbornly excessive inflation.

"Market individuals ought to endure in thoughts that U.S. data releases serene possess the ability to shock: if the core or 'supercore' inflation measures surprise to the upside, entrance-cease yields might maybe leg better once extra, and the buck might maybe stage a surprising rebound," stated Karl Schamotta, chief market strategist at Corpay in Toronto.

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Sterling hit a shut to fifteen-month excessive of $1.2934 after British wage growth hit a joint sage excessive, heaping rigidity on the Financial institution of England to tighten policy extra to bring inflation below assist a watch on. It became once ultimate up 0.6% at $1.2930.

The pound has been rallying on a stronger economic system and aggressive repricing of expectations for tighter BoE policy, analysts stated.

The euro rose to 2-month peaks of $1.1027, and supreme changed hands at $1.1006, up a tiny within the day.

Other European currencies were moreover solid, with the Norwegian crown hitting a shut to three-month excessive and the Swedish crown at a two-week peak against the buck.

In Japan, the yen has risen extra than 3% from a seven-month low touched ultimate month, when it weakened previous the closely watched 145 per buck stage that build apart merchants on excessive alert for imaginable intervention from Jap authorities.

In a vogue of areas, the Australian buck became once ultimate up 0.2% at US$0.6697, whereas the New Zealand forex became once down 0.3% at US$0.6197 sooner than the Reserve Financial institution of New Zealand policy resolution on Wednesday.


Forex command costs at 4:11PM (2011 GMT)

Description RIC Final U.S. Shut Pct Alternate YTD Pct High Expose Low Expose

Old Alternate


Buck index 101.6600 101.9200 -0.24% -1.768% +101.9700 +101.6600

Euro/Buck $1.1005 $1.1001 +0.05% +2.73% +$1.1027 +$1.0977

Buck/Yen 140.3500 141.3150 -0.68% +7.05% +141.4550 +140.1700

Euro/Yen 154.46 155.45 -0.64% +10.09% +155.6700 +154.1900

Buck/Swiss 0.8796 0.8854 -0.64% -4.86% +0.8856 +0.8796

Sterling/Buck $1.2930 $1.2860 +0.55% +6.93% +$1.2934 +$1.2858

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Buck/Canadian 1.3233 1.3280 -0.34% -2.32% +1.3289 +1.3234

Aussie/Buck $0.6687 $0.6677 +0.16% -1.90% +$0.6695 +$0.6652

Euro/Swiss 0.9679 0.9737 -0.60% -2.18% +0.9753 +0.9677

Euro/Sterling 0.8510 0.8553 -0.50% -3.78% +0.8562 +0.8505

NZ $0.6197 $0.6212 -0.26% -2.42% +$0.6224 +$0.6168


Buck/Norway 10.3480 10.4770 -1.14% +5.54% +10.4790 +10.3510

Euro/Norway 11.3880 11.5250 -1.19% +8.59% +11.5385 +11.3876

Buck/Sweden 10.6669 10.7481 -0.77% +2.49% +10.7604 +10.6606

Euro/Sweden 11.7340 11.8255 -0.77% +5.24% +11.8415 +11.7266

(This memoir has been refiled to insert a dropped letter within the word 'scales' within the headline)

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