By Rae Wee
SINGAPORE, May 9 (Reuters) - The dollar inched higher on
Tuesday after a loans survey revealed that credit conditions in
the United States were less gloomy than expected, while the
pound flirted with a one-year peak ahead of this week's Bank of
England policy meeting.
The Federal Reserve's quarterly Senior Loan Officer Opinion
Survey (SLOOS) showed that while credit conditions for U.S.
business and households continued tightening at the start of the
year, it was likely due to the impact of the Fed's aggressive
rate hikes rather than severe banking sector stress.
The closely-watched survey released on Monday was among the
first measures of sentiment across the banking sector since the
recent run of bank failures, sparked by Silicon Valley Bank's
collapse in March, had spread turmoil in global markets.
The U.S. dollar rode Treasury yields modestly higher after
the survey, as traders pared back their expectations on the
scale of Fed rate cuts needed later this year to ease the stress
on the sector. The euro was last 0.16% lower at $1.0987, while
the Japanese yen slipped 0.1% to 135.24 per dollar.
Two-year Treasury yields steadied above 4%, while
the benchmark 10-year yield was last at 3.5148%,
after rising more than five basis points in the previous
session. "It wasn't as bad as expected. There's still a tightening in
credit conditions that is coming ... but overall, at this stage,
the survey is not depicting a credit crunch ahead. And I think
that was good news," said Rodrigo Catril, a currency strategist
at National Australia Bank (NAB).
Against a basket of currencies, the U.S. dollar index rose 0.05% to 101.49, though remained not far from its recent
lows as traders eye a peak in U.S. interest rates.
"The dollar didn't really get much of a kick on that," said
Catril, referring to the survey. "If anything, it's been the
outperformance of pro-growth currencies, which has been lifted
by the improvement in commodity prices ... I think that's been
the bigger mover."
Oil prices had risen over 2% on Monday, as fears of an
imminent recession in the United States eased following the
release of the SLOOS and Friday's robust jobs report.
Commodity currencies like the Australian and New Zealand
dollars slipped in early Asia trade on Tuesday, but held near
their multi-week peaks reached in the previous session.
The Aussie was last 0.07% lower at $0.6776, after
having risen to a roughly three-week top of $0.6804 on Monday.
The kiwi slipped 0.11% to $0.6338, having similarly
scaled a one-month high of $0.63585 the day earlier.
Elsewhere, the British pound fell 0.06% to
$1.26105, but was not far from the previous session's one-year
peak of $1.2668, ahead of Thursday's central bank policy
meeting.
The Bank of England looks set to raise interest rates to
4.5%, matching the quarter-point increases by the Fed and the
European Central Bank last week, as it tries to fight the
highest inflation of any big advanced economy.
"The BoE has been sort of this reluctant hiker, they keep on
saying that they expect inflation to ease and that they're
concerned about the costs of living and the slowdown in the
economy," said NAB's Catril.
"But yet, the reality is that the UK economy has proven to
be quite resilient this year ... the important thing will be the
messaging out of what the bank says."
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(Reporting by Rae Wee
Editing by Shri Navaratnam)
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