Banks Raise Probability of Fed Rate Hike By Investing.com

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By Peter Nurse

Investing.com – The US dollar gained positions at the start of trading on Monday in Europe, rebounding from 1-year lows last week after strong earnings from some of Wall Street’s banking giants calmed expectations. concerns about the health of the sector, raising expectations of another interest rate hike by the Federal Reserve.

By 07:55 AM ET (0755 GMT), the , which tracks the currency against a basket of six other major currencies, was up 0.1% at 101.360.

The index posted its fifth straight weekly loss on Friday, posting fresh one-year lows at 100.78, after the posted its biggest drop since the start of the pandemic.

With inflation rapidly cooling and concerns among Federal Reserve policymakers that weak banking could lead to a “mild recession” this year, traders had begun to consider a pause. in the central bank rate hike cycle in May.

However, a series of strong first quarter 2023 results from JPMorgan Chase (NYSE:) was released on Friday, Citigroup (NYSE:) y Wells Fargo (NYSE:), which allayed concerns over the banking crisis that erupted last month.

In addition, the Governor of the Federal Reserve, , has advocated further tightening of monetary policy to reduce persistently high inflation.

“Given that financial conditions have not tightened significantly, the labor market remains strong and fairly tight, and inflation is well above target, further monetary policy tightening is necessary,” Waller said on Friday.

In the coming days, investors will have one last chance to hear from more Fed members before their traditional silent period leading up to the meeting, including the New York Fed President, the Governor, and the Governor.

Most investors now expect him to raise rates another 25 basis points at his next policy meeting on May 3.

The pair is down 0.1% to the 1.0991 level, pulling back from the 1-year highs recorded last week, although the single currency continues to be in high demand, given widespread expectations that the pair will continue to raising interest rates for longer than its US counterpart, fearing that rapid price growth risks taking hold.

Joachim Nagel, a member of the ECB’s Governing Council, said on Friday: “I don’t think our work is done, even for the most part.” “Rather, in my opinion, further interest rate hikes will be necessary.”

The ECB has raised rates by at least 50 basis points at each of its last six meetings, and is expected to do something similar in May.

The pair rises 0.1% to the 1.2419 level, and the UK will publish its February estimates on Tuesday and a day after that for March, which could determine whether policy makers decide to raise interest rates another 25 basis points. at their meeting next month.

Elsewhere, the pair rises to 0.6711, awaiting the release of the April Reserve Bank meeting on Tuesday, while the pair is up 0.2% to 133.99.

The pair remains flat at 6.8718, awaiting the first quarter reading that is released on Tuesday.