On Monday, the dollar recorded moderate advances, as US equites climbed because of a boost in risk appetite. Therefore, the safe haven’s gains remained under control ahead of the release of inflation data numbers later in the week. On May 13th, the dollar had reached 105.01, which was the highest it has been in over twenty years, but it has now declined to the 102 level once more. The strong payrolls numbers released on Friday saw the dollar notch yet another gain in the last three weeks. On June 15th, the Federal Reserve is also scheduled to make another announcement in its policy meeting.
It is widely expected that the interest rate would be increased by the central bank by about 50 basis points. For now, investors will be waiting for the consumer prices data due on Friday because this will indicate just how long the Fed will continue to remain aggressive when it comes to hiking interest rates. There was a rally in US stocks, as there was a 1% growth in both Nasdaq and the S&P 500 because growth stocks saw some strong gains. Market analysts said that tone of the market was being set by the boost in risk appetite ahead of important events this week.
These events are going to shape the policy of the Federal Reserve for the rest of the year. Currently, there is uncertainty in the market about what will happen in September. They have all priced in a rate hike to happen in the next week, but what turn it will take in September remains to be seen. It will depend on the inflation numbers and it will provide a clearer picture of whether the central bank will hit the pause button in September or not. There was a 0.098% increase recorded in the dollar index, which measures the currency against a basket of others, as it rose to 102.190.
As for the euro, it saw a 0.12% decline against the greenback and was down to $1.0706 ahead of a meeting of the European Central Bank (ECB) scheduled for Thursday. Market analysts have predicted that the ECB will increase the interest rates this year by about 150 basis points, which would mean an increase of 50 basis points in July as well as September. There was a 0.35% decline in the Japanese yen against the US dollar, as it reached 131.32.
Sterling, on the other hand, recorded a 0.47% increase against the greenback to reach $1.2547. The gain in the British currency came while a no-confidence vote was scheduled for the Prime Minister Boris Johnson after the ‘partygate’ scandal. On Monday, the Haruhiko Kuroda, the Governor of the Bank of Japan, said that the priority of the Japanese central bank was to give economic support. Therefore, he said that they would maintain the monetary stimulus. There was a 0.08% increase recorded in the Australian dollar against the greenback, as it reached $0.721 before a policy meeting on Tuesday of the Australian central bank.