Dollar steadies as US spending points to rate hikes - SABC News - Breaking news, special reports, world, business, sport coverage of all South African current events. Africa's news leader.

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The dollar caught its footing on Thursday as strong US retail data cast doubt on market bets that inflation is in retreat and US interest rates need not rise too much further.

The euro was also firm after NATO said a missile that crashed inside Poland was probably a stray fired by Ukraine’s air defences, and not a Russian strike.The Australian and New Zealand dollars fell slightly overnight, in response to the US data, and were steady in morning trade on Thursday.The Japanese yen hovered at 139.25 per dollar, while the Chinese yuan nursed losses at 7.1033 per dollar after China’s central bank promised to keep local liquidity ample and to guide commercial loan growth.

“Markets have positioned for the Fed to pivot,” said Commonwealth Bank of Australia currency strategist Kim Mundy. “The US retail sales data very much challenges that narrative … the US economy is driven by the consumer and if the consumer is still spending, it suggests it’s going to take inflation longer to ease.”

Hawkish remarks from Federal Reserve officials overnight also put some cold water on hopes for a shift, though, with San Francisco Fed President Mary Daly – until recently one of the most dovish officials – saying a pause was off the table. The Treasury market is indicating a slowdown is expected, with 10-year US government bonds yielding 67 basis points less than two-year bonds and that gap nearing levels last reached in 2000.

 

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