Skip to content

WASHINGTON/LONDON, May 31 (Reuters) – The U.S. dollar rose strongly on Wednesday to a more than two-month high as European inflation eased faster than expected and China’s recovery widened.

Earlier in the session, the euro fell to $1.066, the lowest since March 20. It finally dropped 0.64% to $1.06665.

That helped the dollar index, which measures the greenback against six major peers, rise to 104.63, its highest since March 16. It was up 0.509% at 104.570.

Data on Wednesday showed inflation in France and some of Germany’s biggest states slowing. Analysts said the figure would ease pressure on the European Central Bank (ECB) to raise interest rates and reduce the euro’s attractiveness against the dollar.

“Weaker-than-expected inflation in France makes the ECB rate hike less likely, so it will certainly help weaken the euro,” said Chris Gaffney, president of global markets at TIA Bank.

French inflation fell to its lowest level in May as energy and food prices rose modestly. Eurozone inflation data is due tomorrow.

“Europe’s inflation rate is now declining and the ECB’s rate of inflation is declining,” said Carl Hamer, chief strategist at European bank SEB.

Hammer also said that a possible resolution of the US debt ceiling dispute is supporting US stocks and possibly helping the dollar.

Weak economic data from China also boosted the US dollar, analysts said. A survey released on Wednesday showed that China’s factory activity slowed faster than expected in May.

The Chinese yuan fell to its lowest level since November, last trading at $7.1304 against the greenback.

“We’re seeing dollar strength after the weaker-than-expected Chinese data. That was the main mover overnight,” Gaffney said. “If you will, the possibility that we will see the global recovery and the global economy go into recession will give investors something to worry about a bit.”

In a busy day for currency markets, the Japanese yen was last down 0.15%, against the greenback at $140.00.

The dollar hit a six-month high of 140.93 against the yen on Tuesday, but Japan’s top currency diplomat said officials would “closely monitor currency market movements and respond appropriately as necessary.”

Sterling last traded at $1.2368, down 0.36% on the day.

In cryptocurrencies, Bitcoin was last down 2.89% to $26,905.00. Ethereum was last down 2.55% to $1,855.70.

=========================================================

Exchange rates as of 10:30 a.m. (1430 GMT).

Reporting by Hannah Lang in Washington and Harry Robertson in London; Additional reporting by Kevin Buckland, Mark Potter, Helen Popper and Andrea Ritchie Editing

Our Standards: The Thomson Reuters Trust Principles.

Hannah Lang

Thomson Reuters

Hannah Lang covers financial technology and cryptocurrency, including the businesses that drive the industry and the policy developments that drive the sector. Hanna previously covered banking regulations and the Federal Reserve at Bank of America. She graduated from the University of Maryland, College Park and lives in Washington, DC.

[ad_2]

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *