Dollar Stays Firm Against Major Counterparts Ahead Of Fed Policy Announcement

(RTTNews) - The U.S. dollar continued to climb higher against major counterparts on Tuesday as the yield on long term treasury bonds rose ahead of the Federal Reserve's interest rate decision, due on Wednesday.

The Fed is widely expected to hike interest rates by 50 basis points. Goldman Sachs and JP Morgan Chase expect a sharper 75 basis points hike in interest rates as the Fed is likely to aggressively look to curb inflation.

The central bank's accompanying statement is expected to provide clues about future rate hikes and policy stance.

The Bank of England is seen raising interest rates by a modest 25 basis points on Thursday despite Monday's data showing a contraction in the country's GDP in April.

In U.S. economic releases today, data from the Labor Department showed producer prices increased 0.8% month-on-month in May 2022, following a 0.4% rise in April.

The producer price index for final demand less foods and energy rose 0.5% percent from a month earlier in May of 2022, accelerating from a downwardly revised 0.2% gain in the prior month. Year-on-year, core producer prices rose by 8.3%, easing from a revised 8.6% increase in April.

Annual producer inflation in the US edged slightly lower to 10.8% in May of 2022 from 10.9% in April and a 21-year high of 11.5% hit in March.

According to a report from the National Federation of Independent Business, the NFIB Small Business Optimism Index in the U.S. edged down to 93.1 in May of 2022, the lowest since April of 2020, and compared to 93.2 in April.

The dollar index surged to 105.65 before paring some gains, but was still stronger by nearly 0.4% at 105.47.

Against the Euro, the dollar traded at $1.0418, and against Pound Sterling, it strengthened to $1.1999. The dollar firmed to 135.45 yen, gaining from around 134.50.