FOREX, British Pound Gain Ground From BoE, Dollar Turns To Inflation Data
* Chart: Global exchange rates https://tmsnrt.rs/2RBWI5E
By Hideyuki Sano
TOKYO, May 28 (Reuters) – The British pound held close to a three-month high against the dollar on Friday amid rising expectations of an earlier-than-expected rate hike from the Bank of England, while the US currency looks at upcoming inflation data.
The pound was held at $ 1.4203 after gaining 0.58% on Thursday after a Bank of England politician said the central bank was likely to hike rates until the next year.
Gertjan Vlieghe also noted that an increase could come sooner if the economy rebounds faster than expected.
Against the euro, the pound changed hands to 85.83 pence to the euro, close to its five-week high of 85.615 pence to the euro. On the yen, the pound hit a three-year high at 156.02 yen.
The euro settled at $ 1.2192, falling below its 5-1 / 2-month high hit Tuesday of $ 1.2266 as dovish comments from European Central Bank officials dampened its momentum ahead of its June 10 political meeting.
The dollar jumped to 109.85 yen, breaking out of its narrow range in recent weeks, reaching its highest levels in about seven weeks.
The jump likely reflected the selloff of the yen due to MSCI’s reshuffle of its standard stock index, of which nearly 30 Japanese names were dropped, analysts said.
The yen was also hampered by concerns about a delay in Japan’s economic recovery after media reported that Japan was considering extending the state of emergency in Tokyo and several other regions by three weeks until the 20th. June.
Additionally, the dollar benefited from rising U.S. bond yields after a New York Times report that President Joe Biden will announce a $ 6 trillion budget for 2022 on Friday.
The proposal came as the US economic recovery appears to be gaining momentum.
The number of Americans filing new claims for unemployment benefits fell more than expected last week to seasonally adjusted 406,000, as businesses desperately need workers to meet growing demand sparked by an economy reopening.
“The initial claims figure we just saw was pretty good, so obviously expectations are mounting for a solid read on the monthly payroll data expected next week,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
Ahead of the payroll data, US inflation data due Friday at 12:30 GMT is one of the main targets, as a high reading could fuel expectations of a Federal Reserve policy tightening .
Economists expect base prices for PCEs (personal consumption expenditure) to jump 2.9% year-over-year in April, from a 1.8% year-on-year increase a months earlier.
While this is well above the Federal Reserve’s 2% target, economists expect core inflation to gradually slow down later in the year, allowing the Fed to shy away from it. stick to the current size of asset purchases for now.
Elsewhere, the offshore Chinese yuan hit 6.3755 per dollar, after hitting a three-year high at 6.3679 overnight amid rising expectations, China’s central bank is comfortable with a more currency. strong in the context of the country’s economic recovery.
In cryptocurrencies, bitcoin changed hands at $ 38,094, relatively stable over the past 24 hours. Ether was $ 2,732.
(Reporting by Hideyuki Sano; Editing by Michael Perry)