Dollar approaches two-month high after aggressive Fed remarks

Economies.com
2023-05-23 12:17PM UTC

Dollar rose in European trade for a second session against a basket of major rivals, almost touching two-month highs as US 10-year treasury yields spike.

 

Such gains came following bullish remarks by Fed officials, which bolstered the case for a 0.25% Fed rate hike June and hurt chances of early rate cuts this year. 

 

Now investors await a batch of important US data later today, which might bolster dollar's gains.

 

The Index

 

The dollar index rose 0.4% to 103.61, with a session-low at 103.16. 

 

The index rose 0.1% yesterday, resuming gains after a pause on Friday away from two-month highs at 103.62. 

 

US Yields

 

US 10-year treasury yields rose 0.9% on Tuesday for the eighth straight session, hitting two-month highs at 3.753%, bolstering dollar's appeal. 

 

Bullish Remarks 

 

Minneapolis Fed President Neil Kashkari said that US interest rates might move above 6% for inflation to fall below 2%, while Saint Louis Fed President James Bullard said the Fed might need to raise interest rates by another 0.5% this year.

 

Fed Rates

 

Such remarks boosted chances of a Fed 0.25% rate hike in June from 13% to 30%.

 

Major Sectors

 

Now investors await some important US data, including the manufacturing PMI, is expected down to 50.0 this month from 50.2 in April, while the services PMI is expected at 52.6, down from 53.6 last month. 

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