NEW YORK- The dollar bounced off two-week lows as investors awaited inflation data and the Federal Reserve’s interest rate decision next week for any new clues on how high the US central bank is likely to hike rates.
The Fed is expected to hold rates steady at its June 13-14 meeting, but is likely to remain hawkish and indicate a probable hike in July as inflation stays above its 2 percent target.
“They still think they need to do more, and also I would suspect they will continue to discourage expectations of policy easing,” said Vassili Serebriakov, an FX strategist at UBS in New York.
The Fed is expected to revise higher its “dot plot” of policymakers’ rate expectations and inflation projections, “so in that sense, I think the Fed will remain hawkish,” Serebriakov said.
Data due on Tuesday is expected to show headline inflation rose at an annual rate of 4.1 percent in May, while core prices gained 5.3 percent.
The euro was last down 0.30 percent against the dollar at $1.0749. The greenback gained 0.34 percent at 139.40 yen
The dollar index, which measures the currency against six major peers, rose 0.22 percent to 103.53.
The greenback is largely rangebound as investors wait for clearer signs of whether the economy will remain strong and inflation elevated, or if it is headed towards a contraction.
Data on Thursday showed the number of Americans filing new claims for unemployment benefits surged to the highest in more than 1-1/2 years last week.
Last Friday, May jobs data showed employers added 339,000 jobs, more than expected, but unemployment rose to a seven-month high of 3.7 percent. – Reuters
