Por Peter Nurse
Investing.com – The US dollar gains positions at the start of trading in Europe this Friday, boosted by higher US Treasury yields, as Federal Reserve Chairman Jerome Powell has boosted expectations of an aggressive monetary tightening by the Federal Reserve.
At 9:05 AM ET, the , which tracks this currency against a basket of six other majors, is up 0.1% at 100.760, not far off two-year highs hit as of beginning of the week at 101.03.
US Federal Reserve Chairman Jerome Powell all but cemented market expectations of a 50 basis point rate hike at the central bank’s next meeting in May, declaring on Thursday that such a move was on the cards. table, while describing the labor market as overheated.
His remarks, while largely consistent with market expectations, have pushed the yield on US Treasuries to as high as 2.974%, around its highest level since December 2018.
“What has driven the sell-off in Treasuries this month has basically been the story of the Fed’s earlier and more aggressive balance sheet reduction, a story that will continue for months to come,” say analysts at ING ( AS:) in a note.
This strengthening of the dollar is taking place, in particular, against the Japanese yen and the Chinese yuan, as the central bank of Japan maintains its ultra-accommodative stance and the Chinese economy has been affected by the weakening of demand abroad. and the strict restrictions in the country.
The pair fell 0.4% to the 127.92 level, as the yen was supported on Friday by news that Finance Minister Shunichi Suzuki discussed the idea of a coordinated currency intervention with Treasury Secretary of United States, Janet Yellen, earlier in the week.
However, the pair is up more than 1% this month, having hit a two-decade high of 129.43 earlier this week.
The pair rose 0.3% to the level of 6.4687, registering a maximum of seven months, due to the concern about the extension of the confinement measures due to COVID-19, which will sharply curb the economic activity of the second world economy.
Nomura on Friday lowered its forecast for China’s full-year GDP growth from 4.3% to 3.9%, citing worsening economic forecasts and disruptions caused by the country’s COVID 0 strategy.
Elsewhere, the pair is down 0.1% to the 1.0829 level, trading not far above two-year lows on jitters over Sunday’s runoff presidential election in France, while the pair is down 0.8% to the 0.7313 level, posting a five-week low.
The pair is down 0.5% to the 1.2967 level, weighed down by the drop in UK retail sales, which have declined by 1.4% in March for the third time in the last four months, as that the cost of living crisis is increasingly weighing on consumer confidence.