Band Caroline Valetkevitch
NEW YORK, August 3 (Reuters) – The US dollar was up against the yen on Wednesday after data showed a surprise rally in the US services industry in July, while hawkish comments from Federal Reserve officials this week also supported the greenback.
The Institute for Supply Management said its non-manufacturing PMI rebounded last month from June. The increase ended three consecutive monthly declines. It also showed that supply bottlenecks and price pressures have eased, and confirmed the view that the economy is not in recession.
Fed officials on Wednesday again expressed determination to contain high inflation, although it was noted that a half-percentage-point hike in the U.S. central bank’s key rate next month could be enough. to progress towards this goal.
The greenback rallied on Tuesday after a trio of Fed officials signaled the central bank remained “completely united” on raising rates to a level that will put a damper on the highest US inflation since the 1980s.
“The Federal Reserve is pushing back on interest rate cut expectations, and that has helped give the dollar a boost,” said Adam Button, chief currency analyst at ForexLive in Toronto.
Monthly U.S. jobs data due Friday will also help set the tone for the greenback, analysts said.
The dollar index, which tracks the greenback against six major peers, was last nearly flat at 106.40. The index had been lower in the report.
The dollar index, which remains strong for the year so far, eased recently as investors began to reassess the Fed’s aggressiveness in rate hikes.
Against the yen, the dollar was last up 0.6% at 134.05 yen JPY=EBS.
“The yen’s safe-haven status is eroding,” Button said. “The dollar is both the source of growth and the safe haven. That’s absolutely super loaded dollar gains this year, given the state of monetary policy.”
Friction after the highest-level U.S. visit to Taiwan in 25 years could also help support the U.S. dollar, analysts said. China condemned House Speaker Nancy Pelosi’s visit and began six days of military exercises around Taiwan. Pelosi left Taiwan on Wednesday after pledging American solidarity during his brief visit.
Against the dollar, the euro was last flat at $1.0165 EUR=EBS. Earlier reports showed monthly declines in both business activity and retail sales in the Eurozone.
The pound sterling weakened against the dollar. It was last down 0.1% at $1.2145 ahead of a Bank of England policy meeting on Thursday. It is expected to raise rates for the sixth straight time. GBP=D3
Bid rates for currencies at 3:31 p.m. (1931 GMT)
Closing of the previous session
Percentage change since the beginning of the year
New Zealand Dollar/Dollar
Global exchange rateshttps://tmsnrt.rs/2RBWI5E
(Additional reporting by Iain Withers in London; Additional reporting by Kevin Buckland in Tokyo and Rae Wee in Singapore; Editing by Andrew Cawthorne, David Holmes, Will Dunham and Nick Zieminski)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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