New York (awp/afp) – The US dollar rose again on Tuesday against a basket of other major currencies and the euro, as inflation in the United States hit a new high in March since December 1981, at 8.5% over one year.
Around 6:40 p.m. GMT, the Dollar index, which compares the greenback to a basket of other major currencies, climbed to 100.31 points, its highest since May 2020.
The euro dropped 0.52% to 1.0827 dollars per euro, a new low since May 2020, at the start of the pandemic.
“US inflation is still very high, but today’s number was no worse than analysts had expected,” said IG analyst Chris Beauchamp.
Initially, the greenback dipped in reaction to the historic US inflation figure because, as on the stock market, investors focused on the underlying index – excluding food and energy prices – which emerged weaker than expected for the month.
But this initial optimistic reaction fizzled and the dollar resumed its march forward as the prospects of aggressive monetary tightening by the US Central Bank (Fed) are still in place.
“Despite underlying inflation deemed rather benign, the markets then focused on the fact that the Fed made it clear that it was going to raise rates sharply next month,” noted Kathy Lien, of BK Asset management.
The European Central Bank (ECB), which will meet on Thursday, should for its part stick to its cautious line, while the conflict in Ukraine threatens growth in the euro zone.
Moreover, the uncertainty surrounding the second round of the French presidential election weighed on the appetite for the euro.
“I would be surprised if there were no tremors in the European bond market in the next two weeks, and it could push the euro over the $1.08 threshold,” said Kit Juckes, an analyst at Societe Generale.
The yen was stable (+0.06%) at 125.29 yen, holding slightly above its 20-year low at 125.86 yen which it had grazed at the start of the session.
Bitcoin dropped 0.44% to 39,669 dollars. The slump in the markets had made it plunge in Monday’s session to a lowest in a month, at 39,235 dollars.
“For fear of a rapid rate increase in the United States, investors on both sides of the Atlantic are taking cryptos with a grain of salt,” summarizes Timo Emden, independent analyst.
Tuesday class Monday class
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6:45 PM GMT 9:00 PM GMT
EUR/USD 1.0827 1.0884
EUR/JPY 135.66 136.45
EUR/CHF 1.0093 1.0131
EUR/GBP 0.8325 0.8353
USD/JPY 125.29 125.37
USD/CHF 0.9323 0.9309
GBP/USD 1.3005 1.3030
dpa/al