Dollar gains before Fed meeting, inflation data
Updated at 0940 EDT (1340 GMT), changes dateline, previous LONDON
By Karen Brettell
NEW YORK, June 9 (Reuters) -The dollar bounced off two-week lows on Friday as investors awaited inflation data and the Federal Reserve’s interest rate decision next week for any new clues on how high the U.S. central bank is likely to hike rates.
The Fed is expected to hold rates steady at the conclusion of its June 13-14 meeting, but is likely to also maintain a hawkish tone and indicate that a hike is likely in July as inflation remains above its 2% target.
"They still think they need to do more, and also I would suspect they will continue to discourage expectations of policy easing," Vassili Serebriakov, an FX strategist at UBS in New York, said.
The Fed is expected to revise higher its "dot plot" of policymaker's rate expectations and their inflation projections, "so in that sense, I think the Fed will remain hawkish", Serebriakov said.
Inflation data on Tuesday is expected to show headline inflation rose at an annual rate of 4.1% in May, while core prices gained 5.2%. USCPNY=ECI, USCPFY=ECI
The euro EUR=EBS was last down 0.08% against the dollar at $1.0774. The greenback gained 0.32% to 139.37 yen JPY=EBS.
The dollar index =USD, which measures the currency against six major peers, edged up 0.07% to 103.37.
The greenback is largely range bound as investors wait on clearer signs of whether the economy will remain strong and inflation elevated, or if it is headed towards a contraction.
Data on Thursday showed that the number of Americans filing new claims for unemployment benefits surged to the highest level in more than 1-1/2 years last week.
That came after jobs data for May last Friday showed employers added 339,000 jobs during the month, more than expected, but that the unemployment rate rose to a seven-month high of 3.7%.
"This jump put jobless claims close to a two-year high and has been read by markets as a clear sign of coming weakness in the U.S. economy and a more-hesitant-to-hike Fed," CaxtonFX strategist David Stritch said.
The European Central Bank and Bank of Japan are also due to meet next week. The ECB is expected to raise euro zone rates by 25 bps to 3.50% on Thursday, while the BOJ is likely to leave rates unchanged after its two-day meeting on Friday.
The Bank of Canada and the Reserve Bank of Australia jolted markets earlier this week by raising interest rates to tackle stubborn inflation.
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Currency bid prices at 9:40AM (1340 GMT)
Description | RIC | Last | U.S. Close | Pct Change | YTD Pct | High Bid | Low Bid |
Dollar index | =USD | 103.3700 | 103.3200 | +0.07% | -0.116% | +103.5600 | +103.3100 |
Euro/Dollar | EUR=EBS | $1.0774 | $1.0782 | -0.08% | +0.54% | +$1.0786 | +$1.0757 |
Dollar/Yen | JPY=EBS | 139.3650 | 138.9300 | +0.32% | +6.31% | +139.7200 | +138.7650 |
Euro/Yen | EURJPY= | 150.14 | 149.78 | +0.24% | +7.02% | +150.4300 | +149.6500 |
Dollar/Swiss | CHF=EBS | 0.9014 | 0.8992 | +0.26% | -2.50% | +0.9024 | +0.8985 |
Sterling/Dollar | GBP=D3 | $1.2585 | $1.2558 | +0.22% | +4.06% | +$1.2586 | +$1.2536 |
Dollar/Canadian | CAD=D3 | 1.3333 | 1.3359 | -0.18% | -1.58% | +1.3371 | +1.3317 |
Aussie/Dollar | AUD=D3 | $0.6738 | $0.6716 | +0.29% | -1.19% | +$0.6740 | +$0.6694 |
Euro/Swiss | EURCHF= | 0.9710 | 0.9692 | +0.19% | -1.87% | +0.9718 | +0.9685 |
Euro/Sterling | EURGBP= | 0.8559 | 0.8584 | -0.29% | -3.21% | +0.8590 | +0.8561 |
NZ Dollar/Dollar | NZD=D3 | $0.6135 | $0.6096 | +0.66% | -3.36% | +$0.6139 | +$0.6087 |
Dollar/Norway | NOK=D3 | 10.7790 | 10.9020 | -1.02% | +9.96% | +10.9110 | +10.7590 |
Euro/Norway | EURNOK= | 11.6148 | 11.7314 | -0.99% | +10.68% | +11.7690 | +11.5938 |
Dollar/Sweden | SEK= | 10.8226 | 10.7937 | +0.12% | +3.99% | +10.8593 | +10.7828 |
Euro/Sweden | EURSEK= | 11.6562 | 11.6428 | +0.12% | +4.54% | +11.6877 | +11.6232 |
Additional reporting by Amanda Cooper in London; Editing by Jan Harvey
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