- June 24, 2021
- Posted by: Trading
- Category: News
By Peter Nurse
Investing.com – The dollar edged marginally higher in early European trade Thursday, as traders digested diverse opinions from Federal Reserve policy makers over the likely timing of the withdrawal of monetary stimulus.
At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded less than 0.1% higher at 91.838, rebounding from Wednesday’s low of 91.509, but still below the 92.408 high seen at the end of last week.
was down 0.1% at 110.85, was marginally lower at 1.1921, while the risk-sensitive was 0.1% lower at 0.7570.
The greenback received some support on Wednesday after Atlanta Fed President Raphael Bostic and Fed Governor Michelle Bowman said the recent surge in consumer prices may well be temporary in nature, but it will take longer than currently expected to disperse.
This differed from the view of Fed Chair Jerome Powell the previous day who had downplayed the impact of the rising inflation.
Bostic said he is now looking for growth of 7% in 2021 and inflation for the year to be 3.4%, and with this in mind he expects the Fed’s benchmark interest rate will need to increase in the latter half of next year.
This confirms that he was one of the seven FOMC officials that predicted at last week’s Federal Reserve meeting that interest rates would need to be increased sometime next year, a move that gave the dollar a jolt higher.
The Fedspeak continues Thursday, with a further six Fed officials due to speak later, while attention will also be on the widely-watched weekly data to gauge the extent of the recovery in the labor market.
Elsewhere, dropped less than 0.1% to 1.3954 ahead of the latest policy-setting meeting from the Bank of England.
The central bank is not expected to alter its interest rates or its bond-buying program, but it may have to explain its thinking given consumer prices have risen above its 2% target for the first time in almost two years.
That said, “concerns about the spreading Delta variant should prevent any further hawkish repricing of the market outlook for the Bank of England,” said analysts at ING, in a note.
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