Dollar retreats to two-month low; sterling soars on record wage growth
Investing.com | Author Peter Nurse
Published Jul 11, 2023 03:09AM ET
Investing.com - The U.S. dollar slipped to a two-month low in early European hours Tuesday on growing expectations that the U.S. Federal Reserve is nearing the end of its tightening cycle, while sterling hit a fresh 15-month high as wages continue to grow.
At 02:55 ET (06:55 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower to 101.405, falling to levels last seen in mid-May.
End of Fed tightening cycle in sight/h2
The dollar has weakened after several Fed officials said on Monday that while the central bank will still likely need to raise interest rates further to bring down still-high inflation , the end to its current monetary policy tightening cycle is getting close.
An interest rate hike of 25 basis points later this month is largely priced in, and attention is now firmly on Wednesday’s consumer price index release for June, which is expected to show the index rising at the slowest annual increase since March 2021.
A strong inflation number could lead to another hike being priced in for later in the year, leading to more dollar gains, but it appears an end is in sight for the Fed’s more than year-long series of interest rate increases.
Sterling soars as average earnings increase/h2
GBP/USD rose 0.4% to 1.2905, soaring after the latest U.K. employment data showed that average earnings rose at a record 7.3% in June, putting pressure on the Bank of England to continue tightening interest rates with U.K. inflation already at the highest levels in the G7.
EUR/USD rose 0.2% to 1.1018, rising to a two-month peak, after German inflation rose in June, climbing to 6.4% from 6.1% the prior month, interrupting a steady decline since the start of the year.
Asian currencies rise/h2
USD/JPY fell 0.4% to 140.75, with the yen moving further away from a recent seven-month low as U.S. Treasury yields retreated sharply.
USD/CNY fell 0.5% to 7.1983, with the yuan climbing to a two-week high on Tuesday, benefiting from a strong daily midpoint fix by the People’s Bank of China.
AUD/USD rose 0.2% to 0.6691, with the Australian dollar benefiting from data showing an improvement in consumer sentiment.
Get The News You Want
Written By: Investing.com
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.