Dollar Rises To Near 7-year High

(RTTNews) - The U.S. dollar rose to a near 7-week high on Friday with traders betting on just one interest rate cut by the Federal Reserve this year.

The Federal Reserve, which left rates unchanged on Wednesday, said inflation has eased substantially in recent months but still remains too high.

The accompanying statement from the central bank indicated that more participants expect to cut twice than once, but no one expects to cut more than twice. Four policymakers have reportedly said they don't expect a rate cut this year.

A report released by the U.S. Labor Department today showed the producer price index for final demand dipped by 0.2% in May after climbing by 0.5% in April. Economists had expected producer prices to inch up by 0.1%.

The report also said the annual rate of producer price growth slowed to 2.2% in May from an upwardly revised 2.3% in April. Economists had expected the annual rate of producer price growth to accelerate to 2.5% from the 2.2% originally reported for the previous month.

A report by the Labor Department today showed import prices fell by 0.4% in May following a 0.9% advance in April. Economists had expected import prices to inch up by 0.1%.

Meanwhile, the report said export prices slid by 0.6% in May after climbing by an upwardly revised 0.6% in April.

Economists had expected export prices to come in unchanged compared to the 0.5% increase originally reported for the previous month.

Meanwhile, a separate report from the University of Michigan showed the consumer sentiment index fell to 65.6 in June after tumbling to 69.1 in May. Economists had expected the index to rebound to 72.0.

On the inflation front, the report said year-ahead inflation expectations were unchanged at 3.3% in June, above the 2.3-3% range seen in the two years prior to the pandemic.

The dollar index surged to 105.81 around mid morning, but pared some gains as the day progressed. The index was last seen at 105.50, up nearly 0.3% from the previous close.

Against the Euro, the dollar firmed to 1.0707 from 1.0737. The dollar strengthened to 1.2687 against Pound Sterling, gaining from 1.2763.

Against the Japanese currency, the dollar moved higher, fetching 157.39 yen a unit. The Aussie was weak against the U.S. dollar at 0.6615. The Swiss franc gained against the dollar, firming to CHF 0.8902, while the Loonie edged up marginally to C$1.3736.