NEW YORK- The dollar edged higher against a basket of major currencies on Friday, putting it on track for a third straight day of gains, as crude prices reversed earlier weakness and added to pressure for the Federal Reserve to be aggressive in combating inflation.
After initially declining, oil prices rebounded following a missile attack hit Saudi Arabia’s state-run oil company Aramco’s storage facility.
The war in Ukraine and resulting rise in commodity prices has added upward pressure to already high inflation.
The dollar index rose 0.071 percent, with the euro down 0.11 percent to $1.0984.
The greenback is poised for a solid gain this week, which would mark its sixth weekly gain in the past seven. The dollar has benefited from its status as a safe haven and the conflict in Ukraine has driven expectations the Fed will hike interest rates.
“The one thing everyone can agree upon is inflation is going to be longer-lasting and a lot of that will be sticky and that will complicate what central banks do in the end,” said Edward Moya, senior market analyst, at Oanda in New York.
“You will probably see the dollar lead the charge with rate hikes, Europe will lag and that interest rate differential should provide some support for the dollar.”
Joining other analysts that have raised expectations for a more aggressive Fed, Bank of America on Friday said it expects two hikes of 50 bps each at its June and July meetings with “risks” of those being pulled forward into May and June respectively.
