Dollar gains before Fed meeting, inflation data
Business
Dollar gains before Fed meeting, inflation data
NEW YORK (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%.
The euro was last down 0.08% against the dollar at $1.0774. The greenback gained 0.32% to 139.37 yen.
The dollar index , 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.
