Wednesday 22 November 2017

Dollar strengthens ahead of US inflation

The dollar index - which tracks the currency against a basket of six major rivals - was up 0.05pc at 91.92, after rising as high as 92.08. Stock image
The dollar index - which tracks the currency against a basket of six major rivals - was up 0.05pc at 91.92, after rising as high as 92.08. Stock image

Reuters

The US dollar on Tuesday clung to the previous day's gains, supported by a bounce in Treasury yields and ahead of US inflation data that could influence the timing of the next Federal Reserve interest rate increase.

After falling over the summer the greenback also found support as investors further unwound bearish bets against it. The dollar index - which tracks the currency against a basket of six major rivals - was up 0.05pc at 91.92, after rising as high as 92.08.

The index rose 0.60pc on Monday, its largest gain this month, as receding worries about North Korea and Hurricane Irma helped lift investor risk sentiment.

"Interest rates are certainly supportive of the dollar," said Erik Nelson, currency strategist at Wells Fargo Securities in New York.

US long-dated Treasury yields reached two-week highs, rising for a third-straight session amid a respite in geopolitical tensions in North Korea, with investors bracing for a 10-year note auction later in the session.

The S&P 500 and a gauge of global equity markets hit new highs on Tuesday as the feared impact of Hurricane Irma waned and the easing of tensions with North Korea helped drive a sell-off in global bond markets.

The US dollar clung to its gains, helped by the bounce in government debt yields and ahead of US inflation data that could influence the timing of the next Federal Reserve interest rate hike.

European shares rose to a five-week high, extending the relief bounce seen in the previous session and Wall Street advanced, led by gains in financial and industrial stocks.

Oil prices rose almost 1pc after OPEC said its output fell in August and forecast higher demand in 2018.

Irish Independent

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