Dollar rises in early trade

9 May 2023 , 08:27 AM

The results of a loans survey on Tuesday showed that credit conditions in the United States were less dire than anticipated, while the pound nearly reached a one-year high ahead of this week’s Bank of England policy meeting. The dollar made a small gain on Tuesday.

While credit conditions for American businesses and households continued to tighten at the beginning of the year, the Federal Reserve’s quarterly Senior Loan Officer Opinion Survey (SLOOS) revealed that this was more likely attributable to the impact of the Fed’s rapid rate hikes than to serious stress in the banking industry.

One of the first indicators of sentiment across the banking industry since the recent spate of bank failures is the carefully followed survey that was released on Monday. The bank failures were initiated by Silicon Valley Bank’s collapse in March, had spread unrest in international markets, 

After the survey, traders reduced their forecasts for the size of Fed rate cuts needed later this year to relieve pressure on the sector, which helped Treasury rates move moderately higher.

The Japanese yen fell 0.1% to 135.24 per dollar, while the euro was recently down 0.16% at $1.0987.

The benchmark 10-year yield was recently at 3.5148%, up more than five basis points from the previous session, while the two-year Treasury yields remained above 4%.

As speculators anticipate a peak in U.S. interest rates, the U.S. dollar index increased 0.05% to 101.49 against a basket of currencies, albeit it still stayed close to its recent lows.

After the release of the SLOOS and Friday’s strong jobs report, concerns about an impending recession in the United States began to fade, and oil prices increased by more than 2% on Monday.

Early on Tuesday in Asia, commodity currencies like the Australian and New Zealand dollars fell, although they maintained close to the multi-week highs they had attained the previous session.

Ahead of Thursday’s central bank policy meeting, the British pound declined 0.06% to $1.26105, but it was still close to its one-year high of $1.2668 from the previous session.

In an effort to combat the highest inflation of any sizable advanced country, the Bank of England appears prepared to raise interest rates to 4.5%, matching the quarter-point hikes made by the Fed and the European Central Bank last week.

For feedback and suggestions, write to us at [e-mail]