U.S. dollar hits 20-year high as risk aversion dominates & More News Here

U.S. one dollar banknotes are seen in entrance of displayed inventory graph on this illustration taken, February 8, 2021. REUTERS/Dado Ruvic/Illustration

NEW YORK, May 9 (Reuters) – The U.S. dollar was increased on Monday after reaching a twenty-year high as risk-off sentiment stemming partly from considerations over the Federal Reserve’s capacity to fight high inflation boosted the buck’s attraction.

The dollar has risen for 5 straight weeks as U.S. Treasury yields have climbed on expectations the Fed might be aggressive in trying to tamp down inflation.

On Monday, Minneapolis Fed President Neel Kashkari stated the U.S. central financial institution might not get as a lot assist from easing provide chains as it’s hoping for in serving to to chill inflation. Atlanta Fed President Raphael Bostic stated the Fed can maintain to half-percentage-point rate of interest hikes for the subsequent two to a few coverage conferences after which assess the response of inflation and the financial system. learn extra

“I was waiting for more pushback from the Fed to say they are not on that preset course of half-point increases and it just goes to show you right now, the dollar, it is benefiting from that interest rate differential trade which seems like it is only going to get wider over these next several months,” stated Edward Moya, senior market analyst at Oanda in New York.

“Also there is a tremendous amount of worry on Wall Street and you are seeing safe-haven flows continue to come towards the dollar.”

The dollar index rose 0.087% at 103.860 after touching 104.19, its highest stage since December 2002, with the euro down 0.18% to $1.0532.

The Fed final week raised charges by 50 foundation factors as it seeks to decrease inflation with out tilting the financial system right into a recession, whereas a stable jobs report on Friday cemented expectations for extra charge hikes. Investors will get a take a look at extra inflation readings later this week within the type of the buyer value and producer costs indexes.

Yields on most U.S. Treasury notes pared early good points to commerce decrease on Monday as bargain-hunters stepped in after the benchmark 10-year yield hit recent 3-1/2-year highs as inflation fears continued to roil markets.

On Wall Street, shares had been buying and selling sharply decrease, with the S&P 500 (.SPX) index down greater than 2% as development shares had been once more pulled decrease by climbing Treasury yields. Also contributing to the defensive tone was the continued warfare in Ukraine and considerations about rising COVID-19 circumstances in China. learn extra

Markets are fully pricing in a charge hike of at the least 50 foundation factors by the Fed at its June assembly, in line with CME Group’s FedWatch Tool.

The Japanese yen strengthened 0.22% versus the buck at 130.30 per dollar, whereas Sterling was final buying and selling at $1.2307, down 0.24% on the day.

In cryptocurrencies, Bitcoin final fell 9.77% to $32,539.67.

Ethereum , final fell 11.52% to $2,393.36.

Reporting by Chuck Mikolajczak
Editing by Paul Simao

Our Standards: The Thomson Reuters Trust Principles.

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