New York, Feb. 28 (BNA): The dollar fell from a seven-week high on Monday, tracking a slide in US Treasury yields, as investors consolidated gains after the dollar’s recent rally and looked forward to the release of jobs and consumer data. February prices.
The dollar’s decline was exacerbated by a higher-than-expected decline in US durable goods by 4.5% last month, reversing a significant boost from Boeing in December. Claimed durable goods orders rose 5.1% in December.
Analysts reported that the report dampened some of the inherent hawkishness of US interest rates, although they are expected to remain higher for a longer period.
As February draws to a close after the dollar rose nearly 3% during the month on the back of stronger-than-expected US economic data, investors are consolidating their recent positions, said Joe Manimbo, senior market analyst at Convera, Washington.
“It’s just investors taking some chips off the table,” he said. “We have a lot of data so far, and so far, it’s been much hotter than expected and that’s been the fuel for the dollar.”
The market awaits this month’s data on the US unemployment rate on March 10 and the consumer price index on March 14, both of which will influence the Federal Reserve’s policy on interest rates and the central bank’s efforts to slow inflation to its target pace.
“Until the market takes a look at the next non-farm payrolls as well as the next CPI, the market will be reluctant to push the dollar significantly lower,” said Manimbo. “The market is just realizing that the path to 2% inflation is likely to be longer and more volatile.”
Investors will get more information about the state of the global economy this week, with US ISM manufacturing and services survey data for February due on Wednesday and Friday, respectively. On Thursday, preliminary eurozone consumer price inflation figures for February are due.
New data released Monday showed that US pending home sales posting their biggest gain in 2-1/2 years failed to lift the dollar, as did recent strong economic readings.
The National Association of Realtors (NAR) said the pending home sales index, based on contracts signed, jumped 8.1% last month, the biggest increase since June 2020. Economists polled by Reuters had forecast contracts, which would become sales after a month or two, would rise. 1.0%.
Traders now expect the Fed to raise interest rates to around 5.4% in July, as measured by pricing in the futures markets. At the beginning of February, they expected prices to rise to a peak of just 4.9%.
The dollar index, which tracks the currency against six major peers, is down 0.513% and is on track for four straight months of losses. Earlier, it hit its highest level since January 6.
The euro rose 0.58% to $1.0607, while the Japanese yen rose 0.20% against the dollar, at 136.20. The yen reversed some of its gains after rising to a two-month high of 136.54 earlier in the session.
Incoming Bank of Japan Governor Kazuo Ueda said on Monday that the benefits of the bank’s current monetary policy outweigh the costs, stressing the need to maintain support for Japan’s economy with ultra-low interest rates.
Sterling rose after British Prime Minister Rishi Sunak struck a new deal with the European Union on post-Brexit trade rules for Northern Ireland on Monday, and said it would pave the way for a new chapter in London’s relationship with the bloc.
The pound was last trading at $1.2059, up 0.96% on the day.