Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Dollar edges higher as Fed debate over inflation continues

ForexJun 23, 2021 20:30
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking/File Photo

By Karen Brettell

NEW YORK (Reuters) - The dollar ended higher on Wednesday as two Federal Reserve officials said that a period of high inflation in the United States could last longer than anticipated, a day after Fed Chair Jerome Powell played down rising price pressures.

Atlanta Fed President Raphael Bostic said with growth surging to an estimated 7% this year and inflation well above the Fed's 2% target, he now expects interest rates will need to rise in late 2022.

Both Bostic and Fed Governor Michelle Bowman on Wednesday said that while they largely agree recent price increases will prove temporary, they also feel it may take longer than anticipated for them to fade.

The dollar jumped after the Fed surprised markets on June 16 by saying that policymakers are forecasting two interest rate hikes in 2023.

But Powell on Tuesday said that prices are rising due to a "perfect storm" of rising demand for goods and services and bottlenecks in supplying them as the economy reopens from the pandemic and that those price pressures should ease on their own.

“Dollar gains have faded after Mr. Powell downplayed higher inflation lasting for very long,” said Joe Manimbo, senior market analyst, at Western Union Business Solutions in Washington.

That said, “if we see signs of inflation pushing further higher, I think that could go some way in stirring inflation jitters all over again and putting the focus on Fed policy,” Manimbo said.

The dollar index gained 0.06% to 91.798, but is holding below two-month highs of 92.408 reached on Friday.

The dollar weakened earlier on Wednesday and hit a session low after data showed that sales of new U.S. single-family homes fell to a one-year low in May as the median price of newly built houses soared amid expensive raw materials, including framing lumber.

Other data showed that a measure of U.S. factory activity climbed to a record high in June.

Producer price inflation data on Friday is this week’s U.S. economic focus, with other releases including jobless claims on Thursday and consumer spending on Friday.

The euro fell 0.11% to $1.1929.

Data on Wednesday showed that euro zone business growth accelerated at its fastest pace in 15 years in June following the easing of more lockdown measures.

The Japanese yen also fell after data showed factory activity expanded at the slowest pace in four months in June.

The dollar gained 0.29% to 110.66 yen, after earlier reaching 111.10 yen, the highest since March 2020.

Currencies correlated to the global economic cycle, including the Kiwi dollar and Norway's crown, outperformed on Wednesday.

Elsewhere, bitcoin was up around 2.78% on the day at $33,467, after dropping to as low as $28,600 on Tuesday - its lowest since January.

Dollar edges higher as Fed debate over inflation continues
 

Related Articles

Dollar Edges Higher Ahead of Federal Reserve Statement
Dollar Edges Higher Ahead of Federal Reserve Statement By Investing.com - Jul 28, 2021

By Peter Nurse Investing.com - The dollar edged higher in early European trading Wednesday, but remained below recent highs amid caution ahead of the U.S. Federal Reserve's latest...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Tan Tan
Tan Tan Jun 23, 2021 18:58
Saved. See Saved Items.
This comment has already been saved in your Saved Items
covid response : inflation > 4% , corporate bonds, junk bonds purchase
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email