"But then you keep getting these strong U.S. employment data that shows strength and continued wage pressures. So, it seems we keep putting off the inevitable or the inevitable will never come as far as the recession is concerned." Fed funds futures traders are now pricing for the fed funds rate to reach 4.993 in July, and remain below that all year. The Fed's target range stands at 5% to 5.25%, having risen rapidly from 0% since March 2022. "Central bank policy divergence remains in the driver's seat and continues to underpin European currencies at the dollar's expense," said Joe Manimbo, senior market analyst at Convera. "The Fed's latest rate hike could be its last while the Bank of England is expected to hike this week and further over the coming months, buoying the pound."
Sterling hit a more than one-year peak against the dollar on Monday, with the pound traded as high as $1.2668, its highest since April 2022, but slipped slightly below that, and was last seen up 0.11% at $1.2641. The pound remains in focus this week ahead of an expected Bank of England rate increase on Thursday, and has also been firming versus the euro.
Against the dollar, the euro has rallied nearly 16% from September lows, and is trading little changed on the day at $1.1022, supported by expectations the European Central Bank will keep interest rates high for longer than the Fed. The ECB last week also slowed the pace of its interest rate increases but signalled more tightening to come.
Traders remain watchful of the debt ceiling impasse on Capitol Hill, with the Treasury Secretary warning the government might be unable to pay debts by June 1. Meanwhile, U.S. inflation data due on Wednesday, could indicate whether the Fed must do more to rein in inflation. Elsewhere, the dollar was flat against the yen at 134.885.
======================================================== Currency bid prices at 10:31AM (1431 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change
Session
Dollar index 101.2000 101.3200 -0.11% -2.213% +101.3300 +101.0300
Euro/Dollar $1.1025 $1.1019 +0.06% +2.90% +$1.1054 +$1.1016
Dollar/Yen 134.9350 134.8600 +0.06% +2.93% +135.2850 +134.6500
Euro/Yen 148.78 148.57 +0.14% +6.04% +149.2700 +148.6400
Dollar/Swiss 0.8892 0.8905 -0.15% -3.83% +0.8912 +0.8869
Sterling/Dollar $1.2642 $1.2631 +0.11% +4.56% +$1.2668 +$1.2627
Dollar/Canadian 1.3358 1.3374 -0.10% -1.39% +1.3387 +1.3315
Aussie/Dollar $0.6792 $0.6750 +0.61% -0.37% +$0.6803 +$0.6740
Euro/Swiss 0.9804 0.9812 -0.08% -0.94% +0.9822 +0.9801
Euro/Sterling 0.8719 0.8722 -0.03% -1.41% +0.8746 +0.8721
NZ $0.6351 $0.6293 +0.92% +0.02% +$0.6359 +$0.6294
Dollar/Dollar
Dollar/Norway 10.5000 10.5690 -0.90% +6.73% +10.5740 +10.4670
Euro/Norway 11.5797 11.6451 -0.60% +10.35% +11.6640 +11.5440
Dollar/Sweden 10.1518 10.1433 -0.05% -2.46% +10.1951 +10.1340
Euro/Sweden 11.1890 11.1951 -0.05% +0.35% +11.2263 +11.1869
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Laura Matthews in New York and Alun John in London; Additional reporting by Tom Westbrook in Singapore; Editing by Alexander Smith and Chizu Nomiyama)
