Singapore, April 3 (BNA): The US dollar rose broadly as concerns about inflation resurfaced after a surprise announcement from major oil producers to cut output further, as traders bet the Federal Reserve may need to raise interest rates at its next meeting.
The announcement from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, comes after data on Friday showed US consumer spending rose moderately in February after rising the previous month, with inflation showing some signs of abating even as it took hold. Still high, according to Reuters.
Christopher Wong said that while broader contagion risks recede, positive developments in China and expectations that the Federal Reserve is nearing the end of a tightening cycle should keep sentiment broadly supported, gains in oil prices due to a sudden production cut present a risk. New to inflation. Currency Strategist at OCBC in Singapore.
New inflation risks indicate that the fight against inflation is far from over.
The euro fell 0.44% to $1.0791, after touching a one-week low of $1.0788.
The Japanese yen fell 0.46% to 133.41 per dollar.
The pound sterling reached $1.2277, down 0.45% on the day.
The dollar rose 0.32% against the Swiss franc.
The dollar index, which tracks the greenback against six peers, rose 0.078% to 103.01, crossing 103 for the first time in a week.
The OPEC+ cuts sent oil prices up more than 6%.
The cuts were announced even before a virtual meeting of the OPEC+ ministerial committee, which includes representatives from Saudi Arabia and Russia, which was expected to commit to cuts of two million barrels per day, already in place until the end of 2023.
On Sunday, oil producers announced further production cuts of about 1.16 million barrels per day.
The two-year US Treasury yield, which is usually in line with interest rate expectations, rose 4.6 basis points to 4.108%.
The yield on the 10-year Treasury note rose 2.9 basis points, to 3.519%.
Markets are now pricing the probability of the Fed raising interest rates by a quarter point in May to 61%, from 48% on Friday. But by the end of the year, expectations were priced in for cuts of 40 basis points.
The risk-sensitive Australian dollar fell 0.30% to $0.667 ahead of the RBA’s high-risk policy meeting this week, as markets bet the central bank will remain conservative on interest rates after 10 rate hikes.
The kiwi fell 0.62% to $0.622, the largest one-day percentage drop since March 24.
In cryptocurrencies, bitcoin price last fell 2.43% to $27,703.00.
Ethereum, last fell 2.27% to $1,776.40.
NAA