🔥 Premium AI-powered Stock Picks from InvestingPro Now up to 50% OffCLAIM SALE

Dollar slips from near five-week high; Turkish lira weakens

Published 05/15/2023, 02:06 AM
Updated 05/15/2023, 02:23 AM
© Reuters
EUR/USD
-
GBP/USD
-
USD/JPY
-
AUD/USD
-
USD/TRY
-
USD/CNY
-
DXY
-

Investing.com - The U.S. dollar edged lower in early European trade Monday, but remained near a five-week high on inflation concerns, while the Turkish lira retreated on political uncertainty.

At 03:10 ET (07:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower to 102.420, after climbing to 102.75 for the first time since April 10 earlier in the session.

The Federal Reserve raised interest rates last week for a 10th straight time, but hinted that it may be about to pause the most aggressive round of policy tightening in 40 years as it studies the economic data and assesses the impact of the tightening to date.

Consumer prices rose 4.9% in April, a drop from 5% in March, but still far higher than the Fed's 2% target, suggesting inflation remained sticky, while a survey of U.S. consumers' long-term inflation expectations jumped to the highest since 2011.

Fed Governor Michelle Bowman said on Friday that the U.S. central bank will probably need to raise interest rates further if inflation stays high.

"Should inflation remain high and the labor market remain tight, additional monetary policy tightening will likely be appropriate to attain a sufficiently restrictive stance of monetary policy to lower inflation over time," Bowman said.

Also helping the dollar has been its safe haven status amid default concerns with no agreement of raising the country’s debt ceiling in sight.

The main players, including President Joe Biden and House Speaker Kevin McCarthy, are likely to meet early this week to discuss budget negotiations after Friday’s meeting was canceled.

“We still think investors are worryingly eyeing a scenario where it would ultimately take an adverse market reaction to break the impasse, and lack of any progress towards a deal can definitely continue to offer some support to the dollar,” said analysts at ING, in a note.

Elsewhere, USD/TRY rose 0.4% to 19.6350, with the Turkish lira sinking to a two-month low after weekend presidential elections failed to come up with a concrete result, with neither current President Recep Tayyip Erdogan nor rival Kemal Kilicdaroglu crossing the 50% threshold needed to avoid a runoff.

The pair will now go head to head on May 28, with another contender Sinan Ogan now ruled out, resulting in two more weeks of uncertainty.

EUR/USD rose 0.2% to 1.0868, after dipping to a fresh five-week low of 1.0845 earlier in the session. 

The Eurozone is set to release revised data on first quarter GDP on Tuesday, with economists expecting the bloc's economy to have expanded by just 0.1% in the three months to March. 

GBP/USD rose 0.1% to 1.2471, USD/JPY climbed 0.4% higher to 136.25, AUD/USD rose 0.5% to 0.6678, while USD/CNY edged lower to 6.9579, with the yuan trading at an over two-month low against the dollar earlier Monday.

Latest comments

Risk Disclosure: 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.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.