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FOREX-Dollar slips as global growth concerns escalate

(Updates with new prices, Powell remarks) By Herbert Lash and Joice Alves NEW YORK/LONDON, June 22 (Reuters) – The dollar eased against the euro and yen on Wednesday as concerns mounted as for the raising of interest rates by the main central banks to contain inflation, there is a risk of inducing a sudden global slowdown or recession. British consumer price inflation hit a new 40-year high of 9.1% in May, while annual Canadian inflation jumped to 7.7% last month to reach the highest rate since January 1983, according to the latest data showing that consumer prices are higher than expected. The British pound initially lost almost 1% falling to an almost one-week low of $1.2162, but then pared its losses. The Canadian dollar slid against the US currency, but remained below the 1.30 level it reached last Friday and Monday. Market participants are torn between acknowledgment that central banks are tightening financial conditions more aggressively than expected a month or two ago and concern over the economic fallout, said Marc Chandler, chief market strategist at Bannockburn. GlobalForex. “Sentiment is choppy partly because we don’t know when inflation will peak,” Chandler said. “Everything is dictated by inflation, inflation expectations and central bank policy.” The Federal Reserve is ‘strongly committed’ to lowering inflation and policymakers are moving ‘quickly to do so’, U.S. central bank chief Jerome Powell said in prepared remarks for a Banking Committee hearing of the US Senate. “Inflation has obviously surprised on the upside and more surprises may be in store,” Powell said in his remarks. The dollar index fell 0.201%, with the euro up 0.32% at $1.0559. The Japanese yen strengthened 0.53% to 135.89 to the dollar, while the pound was down 0.06% at $1.2265. The safe haven dollar gained ground against most peers. The yen hit a new 24-year low as rising US and European bond yields contrasted with low Japanese interest rates. “Recession fears are growing as central bankers slow demand to curb inflation. Pro-cyclical currencies are in retreat and the dollar remains in high demand,” said Chris Turner, global head of markets at ING. Analysts see no immediate end to a selloff that has seen the yen weaken 18% this year from 115.08 at the end of 2021. The currency has weakened as rising energy prices have put pressure on Japan’s current account and because of the spread between Japanese government bond yields and US treasury bills. The Bank of Japan last week kept interest rates ultra-low and pledged to defend its yield curve control (YCC) policy, which effectively caps the yield on 10-year Japanese government bonds. at 0.25%. “The dollar/yen continues to trade on Treasury yields, which were flat but with the 10-year remaining above the 3.20% level while the Bank of Japan did a lot to defend YCC,” said Redmond Wong, market strategist at Saxo Hong Kong Markets. Currency Bid Price at 10:09 AM (1409 GMT) Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid Previous Session Dollar Index 104.1700 104.4300 -0.24% 8.893% +104.9500 + 104.1100 Euro/Dollar $1.0563 $1.0535 +0.27% – 7.09% + $1.0570 + $1.0470 / yen 135.8350 136.6900 -0.61% + 18.01% +136 .7100 +135.6800 Euro / Yen 143.47 143.94 -0.33% + 10.09% +144.0100 +142.6800 Dollar / Swiss + 0.966666666666660.59.59% + 0.59.59.59.59.59.59. 0.9600 Sterling/Dollar $1.2269 $1.2279 -0.06% -9 .27% +$1.2302 +$1.2163 +1.2996 +1.2915 Aussie/Dolar 0.6930 0.6974 -0.62% -4.6% +0.6930 0.688888888222220.6820, 692 0,6920,68888888228228282828282882828282828282882828282828282828282828 1.0175 -0.25% -2.11% +1.0178 +1.0133 Euro/Sterling 0.8606 0.8582 +0.28% +2.45% +0.8623 +0.8575 NZ $0.6289 $0.6330 -0.63% -8.11% +$0.6331 +$0.6244 Dollar/Dollar Dollar/ Norway 9.9350 9.8435 +1.00% +12 .85% +9.9970 +9.8800 Euro/Norway 10.4962 10.3647 +1.27% +4.83% +10.5210 +10.3648 Dollar/Sweden 10.1010 10.1004 +0, 33% +12.01% +10.1927 +10.0965 Euro/Sweden 10.0965 19 10.6371 +0.33% +4.28% +10.6915 +10.6400 (Report by Herbert Lash, report additional by Joice Alves and Alun John; Editing by Muralikumar Anantharaman, Mark Potter and Emelia Sithole-Matarise)

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