Dollar rises slightly, sterling hovers near one-year high

Singapore, May 9 (BNA): The dollar rose on Tuesday after a survey of loans showed that US credit conditions were less bleak than expected, while the pound plunged into a one-year peak on expectations that the Bank of England will raise interest rates. week.

In Asia, trade data released on Tuesday showed that China’s imports fell 7.9% in April from a year earlier, while exports grew at a slower pace of 8.5% in the same period after an unexpected rise of 14.8% in March.

Yuan showed little reaction. Reuters reported that the offshore yuan was last down 0.1% at 6.9287 per US dollar.

The day before, the Fed’s Senior Loan Officers (SLOOS) Poll showed that while credit conditions for US businesses and households continued to tighten at the start of the year, that was likely due to the impact of strong increases by the Fed. In interest rates rather than severe pressure on the banking sector.

The closely watched poll released on Monday was among the first gauges of sentiment in the banking sector since the recent series of bank failures, sparked by the collapse of Silicon Valley in March.

The US dollar rode Treasury yields slightly higher after the survey, as traders scaled back their expectations about the size of the Fed’s interest rate cuts needed later this year to ease pressure on the sector.

The euro was last down 0.13% at $1.0990, while the Japanese yen rose about 0.05% to 135.04 per dollar, marginally supported by comments from Bank of Japan Governor Kazuo Ueda.

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Ueda said on Tuesday that the Bank of Japan will end its policy of yield curve control, and then start shrinking its balance sheet, once the inflation prospects rise to reach its 2% target sustainably.

The two-year US Treasury yield was just under 4%, after rising above that level for the first time in about a week on Monday.

The benchmark 10-year yield was at 3.4995%, after rising more than five basis points in the previous session.

“(The poll) wasn’t as bad as expected. There is still a tightening in credit conditions coming… But overall, at this point, the survey doesn’t depict a credit crunch in the future. And I think that was good news,” said Rodrigo Catrill, currency analyst. at the National Australia Bank (NAB).

Against a basket of currencies, the US Dollar Index rose 0.03% to 101.47, although it remained off recent lows as traders eye a peak in US interest rates.

“The dollar hasn’t gotten much of a kick,” Cattrell said. “If anything, it was the outperformance of the pro-growth currencies, which was boosted by the improvement in commodity prices… I think that was the biggest driver.”

Oil prices rose more than 2% on Monday, as fears of an imminent recession in the United States eased after the release of SLOOS and a strong jobs report on Friday.

Commodity currencies such as the Australian and New Zealand dollars fell in Asian trade on Tuesday, but held near multi-week highs reached in the previous session.

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The Australian dollar was last down 0.05% at $0.67775, after rising to a nearly three-week high of $0.6804 on Monday.

The New Zealand dollar fell 0.2% to $0.6332, after similarly rising to a one-month high of $0.63585 the previous day.

Elsewhere, the British pound fell 0.03% to $1.2614, but it was not far from the previous session’s peak of $1.2668, ahead of the central bank’s monetary policy meeting on Thursday.

The Bank of England appears ready to raise interest rates to 4.5%, as it tries to fight the highest inflation rate of any large developed economy.

“The Bank of England has been kind of this tentative promenade, they keep saying they expect inflation to ease and they’re worried about the cost of living and the slowdown in the economy,” said NAB’s Cattrell.

“However, the reality is that the UK economy has proven to be quite resilient this year… The important thing is the messages coming out of what the Bank says.”

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