· The dollar hovered near a 22-month high against its peers on Wednesday, after strong U.S. housing data further eased concerns of a slowdown in the world’s biggest economy.
The dollar advanced across the board on Tuesday as financial markets re-opened after the Easter holiday and traders favored the greenback ahead of the release on Friday of U.S. gross domestic product data for the first three months of 2019.
The dollar index, which measures the greenback against six currencies, rose 0.34% to 97.622, after rising to 97.777 overnight, its highest since June 2017. The euro was 0.33% lower at $1.1218 after briefly slipping below the $1.12 handle for the first time in nearly three weeks.
The dollar was supported by data on Tuesday that showed sales of new U.S. single-family homes jumped to a near 1-1/2-year high in March.
The data follow recent positive news on retail sales and exports which have eased concerns of a sharply slowing U.S. economy, analysts said.
Sterling slid to a two-month low as hopes for a breakthrough in Brexit talks between the ruling and opposition parties faded and British Prime Minister Theresa May faced growing pressure to quit.
· The Federal Reserve’s benchmark interest rate has inched up to its highest level in 11 years even though the central bank has sent a clear message that it is done tightening policy indefinitely.
In recent days, the effective fed funds rate, which targets the overnight level that banks charge each other for loans, has moved up to 2.44%. That’s the highest since March 2008 and is just 6 basis points from the top of the target range and the closest to the top since December, when the Fed last raised rates.
For now, the move is looked on as not being especially problematic given that there is still room between the current level and the top of the 2.25% to 2.5% range in which the rate is supposed to trade. But moves toward the upper end of the band have prompted action before, and the trend likely will be a topic of discussion at next week’s Federal Open Market Committee meeting.
· China’s stronger-than-expected claim of 6.4% economic growth in the first quarter may be tempting policymakers to pare back stimulus, but analysts say that would be a mistake.
The Communist Party’s powerful politburo says in a statement that the economy is off to a good start this year, but financial and real-estate markets should be closely monitored for possible risks.
“We believe the pace of monetary easing will slow, but it is still too early to withdraw monetary easing measures despite the limited monetary policy scope,” Nomura economists say in a note.
· Oil prices hit nearly six month highs on Tuesday, continuing to rally after U.S. President Donald Trump surprised the market with strict new measures aimed at driving Iran’s crude exports to zero.
The Trump administration announced on Monday that it will not extend sanctions waivers to a handful of countries that import Iranian oil. The decision means any entity caught purchasing Iran’s barrels after May 1 risks triggering U.S. sanctions, which are designed to deprive the Iranian leadership of oil revenue.
U.S. West Texas Intermediate crude settled 75 cents higher at $66.30 a barrel, rising 1.1% and setting a new closing high going back to Oct. 29. WTI earlier rose as high as $66.60 on Tuesday, its best intraday price since Oct. 31.
Brent crude futures were up 53 cents at $74.57 per barrel around 2:30 p.m. ET. The international benchmark for oil prices earlier rose to $74.73, its highest since Nov. 1.
Reference: CNBC, Reuters
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