FOREX-Dollar holds below two-month highs as Fed policy in focus, sterling slips

  • 6/24/2021
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* Graphic: World FX rates tmsnrt.rs/2RBWI5E (Adds quotes, updates prices; changes dateline, previous LONDON) By Karen Brettell NEW YORK, June 24 (Reuters) - The dollar dipped on Thursday as investors evaluated the likelihood that the U.S. Federal Reserve will be more aggressive in stamping out high inflation if it persists, while the pound weakened after the Bank of England made no changes to its monetary policy. Fed policymakers have been offering differing viewpoints on how long inflation is likely to stay high and when it will be appropriate to tighten monetary policy, after the Fed last week surprised markets by forecasting two rate hikes in 2023. The dollar has slipped since reaching two-month highs on Friday in the wake of the Fed meeting. “I do suspect we’ll have a little bit more consolidation and then some more dollar upside,” said Erik Nelson, a macro strategist at Wells Fargo in New York. “The Fed put the market on notice with regards to its inflation target and new mandate, and really just the idea that they would be completely and resolutely dovish forever … so I think there’s more room for a shakeout here,” Nelson said. The dollar fell slightly after data on Thursday showed that fewer Americans filed new claims for unemployment benefits last week as the labor market recovery from the COVID-19 pandemic gains traction amid a reopening economy. Other data showed that new orders for key U.S.-made capital goods unexpectedly fell in May, likely held back by shortages of some products. The next major U.S. economic focus will be producer price data on Friday. The dollar index was last down 0.06% against a basket of currencies at 91.733. It is holding below a two-month high of 92.408 reached on Friday. Sterling slipped after the Bank of England said inflation would surpass 3% as Britain"s locked-down economy reopens, but the climb further above its 2% target would only be "temporary" and most policymakers favored keeping stimulus at full throttle. “While the underlying tone was quite upbeat, and we do think that there was a clearer hawkish lean, it was not hawkish enough for those looking for a sharper turn after last week"s FOMC meeting,” analysts at TD Secuities said in a report on Thursday. The British pound was last down 0.35% at $1.3916. The euro gained 0.13% on the day to $1.1942. German business morale rose by more than expected in June and hit its highest level since November 2018 on companies" surging optimism about the second half of the year in Europe"s largest economy, a survey showed on Thursday. The greenback gained to 111.11 Japanese yen overnight, the strongest since March 2020, before dropping back to 110.78. Data on Thursday showed that Japan"s corporate services prices rose at the fastest annual pace in eight months in May. ======================================================== Currency bid prices at 9:31AM (1331 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index 91.7330 91.7990 -0.06% 1.947% +91.8730 +91.6580 Euro/Dollar $1.1942 $1.1927 +0.13% -2.26% +$1.1956 +$1.1918 Dollar/Yen 110.7750 110.9750 -0.14% +7.29% +111.1100 +110.7400 Euro/Yen 132.30 132.32 -0.02% +4.24% +132.5700 +132.1200 Dollar/Swiss 0.9183 0.9181 +0.04% +3.82% +0.9200 +0.9175 Sterling/Dollar $1.3916 $1.3966 -0.35% +1.86% +$1.3986 +$1.3892 Dollar/Canadian 1.2306 1.2307 -0.02% -3.37% +1.2314 +1.2283 Aussie/Dollar $0.7581 $0.7577 +0.06% -1.45% +$0.7590 +$0.7566 Euro/Swiss 1.0966 1.0950 +0.15% +1.47% +1.0976 +1.0952 Euro/Sterling 0.8581 0.8542 +0.46% -3.98% +0.8591 +0.8534 NZ $0.7063 $0.7047 +0.20% -1.67% +$0.7073 +$0.7043 Dollar/Dollar Dollar/Norway 8.5105 8.5420 -0.28% -0.80% +8.5440 +8.4940 Euro/Norway 10.1647 10.1745 -0.10% -2.89% +10.1903 +10.1347 Dollar/Sweden 8.4657 8.4771 -0.04% +3.29% +8.5061 +8.4533 Euro/Sweden 10.1105 10.1149 -0.04% +0.34% +10.1279 +10.1020 (Reporting by Karen Brettell; additional reporting by Elizabeth Howcroft in London; Editing by Angus MacSwan) Our Standards: The Thomson Reuters Trust Principles.

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