Reuters raises the next test for U.S. dollar inflation in U.S. companies

Author: Tom Westbrook

SYDNEY (Reuters) – The dollar started the week steadily in Asia on Monday, but remained below Friday’s highs as currency traders swore at volatile market rates and central banks waited and watched the outlook as inflation rose. .

The next major test of the Federal Reserve’s patience in patience will be on Wednesday, when U.S. inflation data show that consumer growth is in full swing.

In the Asian session, the dollar traded against the yen and regained some of the ground it lost last week, rising 0.2% to 113.65 yen. The dollar also rose slightly with the euro to $ 1.1558, although it was below $ 1.15135 for the 15-month period as a result of strong US labor data on Friday.

Sterling, the Bank of England (BoE) surprised traders by keeping rates stable last week, hitting $ 1.3478 after falling $ 1.3425 on Friday, the five-week low.

The BoE’s surprise caused a sharp setback in Britain and around the world in its immediate rate hikes in aggressive betting.

“Central banks have distorted a lot of markets, pumping the capital market and pumping the bond market,” said Jason Wong, a strategist at the Bank of New Zealand in Wellington. “Currencies are in the middle of it all, wondering what the hell is going on.”

The risk-sensitive Australian and New Zealand dollars made great strides in early trading, below $ 0.74 and the New Zealand dollar at around $ 0.7126. [AUD/]

It rose 0.1% to 94,308.

Later on Monday, less than six Fed officials are speaking, and the most attention will be on Vice President Richard Clarida, who is talking about Fed and ECB policy.

Goldman Sachs (NYSE :), which recently advanced expectations of the Fed’s rise from the third quarter of 2023 to July 2022, believes the earlier rise could support the greenback.

“We forecast a reduction in the value of the dollar in our forecasts, especially against the euro,” Goldman analysts said, although they expect the dollar to weaken in 2023 and beyond.

Elsewhere, the data showed that Chinese exports were unexpectedly strong and imports were unexpectedly soft on another indicator of demand, mainly because China is tightening its movement restrictions to keep COVID-19 afloat.

The Communist Party will begin a meeting on Monday to approve a resolution praising President Xi Jinping and lay the groundwork for his third term in office.

Traders are also looking at Chinese producer and consumer price data on Wednesday, as annual producer price growth rose to 12%, perhaps as a harbinger of further price pressures coming from global supply chains.

The yuan was stable at $ 6.3958 per dollar.