Dollar pares gains on falling U.S. labor costs, before Fed decision
Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
Recasts with jobs data, adds quotes, details; updates prices; changes byline; previous LONDON
By Karen Brettell
NEW YORK, Jan 31 (Reuters) -The dollar gave up gains madeearlier on Tuesday after data showed U.S. labor costs increased less than expected in the fourth quarter, and before the Federal Reserve is expected to hike rates by 25 basis points on Wednesday.
The Employment Cost Index, the broadest measure of labor costs, rose 1.0% last quarter after increasing 1.2% in the July-September period, the Labor Department said on Tuesday.
Still, it is not seen as likely to sway the U.S. central bank from hiking rates further.
“Despite the fact that it came in below expectations, objectively speaking it’s still a pretty firm print that means that the Fed is still going to sound hawkish,” said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto.
Fed funds futures traders are pricing for the Fed’s benchmark rate to peak at 4.93% in June, up from 4.33% now. FEDWATCH
But investors are also bearish on the U.S. economy and see the Fed as having to cut rates back to 4.48% by December. This is despite Fed officials stressing they will need to keep rates in restrictive territory for a period of time in order to bring down inflation.
“(Fed Chair Jerome)Powell and the FOMC will want to flag the fact that we are going to see higher rates for a little bit longer, it’s all about whether or not the market believes that narrative at this point,” said Rai.
The dollar index =USD was last little changed on the day against a basket of currencies at 102.24. It earlier rose to a two-week high of 102.61, which analysts said was likely due in part to repositioning for month-end. The greenback is also trading just above key technical supports against major currencies including the euro.
The index has weakened from a 20-year high of 114.78 on Sept. 28 as investors price in the likelihood that the U.S. central bank is nearing the end of its tightening cycle.
The euro EUR=EBS was also little changed on the day at $1.0847, after earlier falling to $1.0800.
Data on Tuesday showed the euro zone eked out growth in the final three months of 2022, managing to avoid a recession even as sky-high energy costs, waning confidence and rising interest rates took a toll on the economy that is likely to persist into this year.
The European Central Bank and Bank of England are both expected to hike rates by 50 basis points on Thursday.
Sterling GBP=D3 fell 0.26% against the dollar to $1.2317.
The dollar fell 0.45% against the Japanese yen JPY=EBS to 129.85.
Additional reporting by Harry Robertson in London
Editing by Mark Potter
Activos relacionados
Últimas noticias
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.
