NEW YORK - The U.S. dollar hit a new 20 year high on Monday as risk-off sentiment boosted the greenback's safe-haven appeal due to concerns over the Federal Reserve's ability to combat high inflation.
The dollar has risen for five consecutive weeks as U.S Treasury yields have climbed on expectations that the Fed will be aggressive in trying to tamp down inflation.
On Monday, Minneapolis Fed President Neel Kashkari said the U.S. central bank may not get as much aid from easing supply chains as it is hoping to help cool inflation. At the Atlanta Fed President Raphael Bostic said he already sees signs of peaking supply pressures and that should give the Fed room to hike at half-percentage point interest rate increments for the next two to three policy meetings, but nothing bigger.
Concerns about rising COVID 19 cases in China and the ongoing war in Ukraine also contributed to the defensive tone.
Edward Moya, Senior Market Analyst at Oanda in New York, said that they have a trifecta of drivers here that are going to keep the dollar on solid footing.
It's likely that the belief that you are not going to see any major risk factors resolved this week is going to make it complicated for ending the dollar's reign. The dollar index fell by 0.135% at 103.630 after touching 104.19, its highest level since December 2002, with the euro up 0.15% to $1.0567.
The Fed raised rates by 50 basis points last week as it tried to lower inflation without turning the economy into a recession, while a solid jobs report on Friday confirmed expectations for more rate hikes. The consumer and producer price indexes will be updated this week, and investors will get a look at more inflation readings later this week.
The yield on most U.S. Treasury notes weakened early gains to trade lower on Monday after the benchmark 10 year yield hit fresh 3-1 2 year highs of 3.203% on Wall Street. Stocks were trading sharply lower on Monday as major averages fell below their worst levels of the day after hitting fresh lows for the year.
According to CME Group's FedWatch Tool, the Fed's June rate hike of at least 50 basis points is completely pricing in a move by the Fed of at least 50 basis points. Is it possible to trade interest-rates countdown to fomc.html? Feed-funds are redirected to trading interest-rates. The Japanese yen gained 0.24% against the dollar at 130.28 per dollar, while the pound was trading at $1.2343, up 0.05% on the day.
The last price ofBitcoin fell 14.93% to $30,679. Its lowest point since July 21, 2021 was 52, after dropping to $30,321, it's lowest since July 21, 2021.