Washington (awp/afp) – The dollar is gaining ground on Friday, with no progress on the Middle East war after the meeting between Presidents Donald Trump and Xi Jinping reviving inflation fears.
At around 6:20 pm GMT, the greenback was up 0.40% against the European single currency, at 1.1623 dollars for a euro, and rose by 0.58% against the British currency, at 1.3323 dollars for a pound.
“The American dollar finishes the week on the rise” as “oil prices rise and global stock markets (…) fall,” summarize the analysts at Scotiabank.
Thursday’s hope was “that the Trump-Xi meeting could lead to some positive headlines (including on Iran) that would cap the greenback and boost the risk sentiment,” but “for now, it’s too little,” notes Francesco Pesole of ING.
The American president only mentioned encouraging remarks from Xi Jinping, stating that China would not provide weapons to Tehran and that it could contribute to the reopening of the Strait of Hormuz.
This status quo raises fears of a general acceleration of inflation.
“The American data published this week clearly showed that price pressures persist,” note the experts at Scotiabank.
Producer inflation (PPI) surged in April in the United States, up 6% year-on-year compared to 4.3% in March. The Consumer Price Index (CPI) reached 3.8% year-on-year last month, the highest in over three years.
“This leads the markets to anticipate a higher probability of a Fed rate hike this year,” observe the analysts at Scotiabank.
A monetary tightening would be supportive of the dollar.
Meanwhile, the pound continues to weaken with the intensification of maneuvers by potential rivals of Prime Minister Keir Starmer within the Labour Party.
Markets fear, in particular, “the prospect of a major leftward shift that would thwart growth and deepen an even greater deficit in British public finances,” summarizes Kathleen Brooks, analyst at XTB.
Already propelled by an uncertain global economic context due to war, British government bond interest rates climbed on Friday.
The 10-year rate spiked to 5.180%, a level not seen since the 2008 financial crisis, while the 30-year rate reached a peak since 1998, at 5.858%.
Friday’s exchange rates Thursday’s exchange rates 18:20 GMT 22:00 GMT EUR/USD 1.1623 1.1669 EUR/JPY 184.55 184.80 EUR/CHF 0.9146 0.9145 EUR/GBP 0.8724 0.8707 USD/JPY 158.73 158.37 USD/CHF 0.7870 0.7837 GBP/USD 1.3323 1.3403
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