Dollar Prowls Just Below Highs As Euro Gasps For Gas

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The dollar began the week nudging down from multi-year highs; with hotter-than-forecast inflation reading in New Zealand lending modest support to the kiwi; though fears about Europe’s gas supply put a cap on dollar selling.

The greenback has soared this year thanks to a combination of rising U.S. interest rate; and wobbling economies in Europe and China. It pushed above parity on the euro for the first time in almost 20 years last week, before easing back. The euro last bought $1.00955 and the yen , which has tumbled about 17% this year, steadied at 138.37 per dollar. The New Zealand dollar and the Aussie inched higher after inflation surged to a three-decade high in New Zealand.

In the spot market, the onshore yuan last changed hands at 6.7468 per dollar; having recovered a little from a two-month low of 6.77 hit Friday. The offshore yuan stood at 6.756. Similarly, no changes are expected from the BOJ, which is expected to maintain its ultra-easy policies, meaning more pain for the beleaguered yen.

The U.S. dollar index was steady at 107.86, marginally lower than last week’s two-decade high of 109.290, though few seem willing yet to call a peak to the dollar’s gains. The Federal Reserve meets later in July and is expected to lift the benchmark U.S. interest rate by 75 bps. Even though that is more conservative than the 100 bp hike markets had priced in at one point last week, it is still quite a stiff increase.

-Reuters.

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