Dollar advances on inflation worries; payrolls data eyed
The dollar climbed across the board on Wednesday, as surging energy prices fueled concerns about inflation and interest rate hikes, knocking investors’ appetite for riskier assets and driving flows to safe-havens.
With oil prices hitting their highest in seven years, shares fell and government bond yields rose across the world early on Wednesday, before reversing some of the moves later in the session.
Rising inflationary pressures could pose headwinds to growth and have implications for how soon the Federal reserve can raise interest rates.
The Federal Reserve has said it is likely to begin reducing its monthly bond purchases as soon as November and then follow it up with interest rate increases, as the U.S. central bank’s turn from pandemic crisis policies gains momentum.
The U.S. Dollar Currency Index , which measures the greenback against a basket of six currencies, was 0.3% higher at 94.228. The index hit a 1-year high of 94.504 last week.
Investors remained on edge regarding U.S. debt ceiling negotiations, even as the top U.S. Senate Republican Mitch McConnell said his party would allow an extension of the federal debt ceiling into December, a move that would head off a historic default with a heavy economic toll.
The U.S. payrolls report at the end of the week, which could provide clues to the U.S. Federal Reserve’s next move, remains a point of focus for investors.
Friday’s non-farm payrolls data is expected to show continued improvement in the labor market, with a forecast for 473,000 jobs to have been added in September, a Reuters poll showed.
TREASURIES-Short-end yields fall on possible U.S. debt limit extension
The benchmark 10-year yield, which earlier hit a session high of 1.573%, was last down 1 basis point at 1.5206%
after retreating from June highs along with yields on 20-year and 30-year bonds.
Reference: CNBC
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