Dollar holds gains on US bank results, kiwi slides on CPI data

Washington, DC, April 20 (BNA): The US dollar held on to gains on Thursday after strong US banking results fueled expectations that the Federal Reserve will keep monetary policy tight for longer, and the New Zealand dollar fell after cooler-than-expected inflation data. .

The dollar index, which measures it against a basket of peers, was little changed at 101.96 after rising 0.27% on Wednesday.

The kiwi fell 0.7% to $0.6154 after touching the weakest level since March 16.

The Japanese yen lost 0.1%, to 134.82, after trading above 135 against the dollar for the first time in a month on Wednesday, Reuters reported.

Morgan Stanley reported first-quarter earnings on Wednesday that beat expectations, adding to rosy results from major US lenders that allayed fears of a widening crisis after the failures of Silicon Valley and Signature Bank last month.

“The banking results continue to show that the funding situation for US banks is stabilizing,” said Sim Moh Siong, currency analyst at Bank of Singapore. “And that helps the dollar, plus the fact that we have a little bit of hawkish talk from the Fed, the market is starting to price on how much the Fed has cut this year.”

The US central bank will deliver a final interest rate increase of 25 basis points in May and then keep interest rates steady for the rest of 2023, economists polled by Reuters said.

New York Federal Reserve Bank President John Williams said on Wednesday that inflation remains at problematic levels and that the US central bank will act to bring it down.

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New Zealand’s Consumer Price Index (CPI) for the first quarter came in below expectations on Thursday, but remained near all-time highs. This followed hotter-than-expected UK CPI figures which boosted bets on a Bank of England rate hike in May.

The British pound fell 0.17% to $1.243, reversing Wednesday’s gains.

The Australian dollar fell 0.17% to $0.6703. A review of the Reserve Bank of Australia (RBA) released on Thursday outlined a raft of reforms, including a more focused policy mandate.

Traders expect more signals from US manufacturing data on Friday, the Bank of Japan meeting next week, and the Federal Reserve’s Open Market Committee (FOMC) early next month, Bank of Singapore’s Sim said.


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