Dollar regains ground after hawkish comments from Fed officials: June 24, 2021

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The greenback rallied on Wednesday afternoon in New York after hawkish comments from two Fed officials, saying a period of high inflation in the United States could last longer than expected. Reuters earlier reported that Atlanta Fed Chairman Raphael Bostic said that with growth estimated at 7% this year and inflation well above the Fed’s 2% target, it is now expects interest rates to rise at the end of 2022. Bostic and Fed Governor Michelle Bowman on Wednesday said that while they largely agree that recent price increases will be temporary, they also feel that it might take longer than expected for them to fade.

Against the Japanese Yen, the Dollar traded with a firm bias in Asia and hit a 14-month high at 111.10 in the European morning due in part to active cross-selling in jpy. However, the pair then reduced its gains and fell sharply to 110.67 before New York opened before staging a rebound to 111.00 on renewed USD strength after hawkish comments from officials in the US. Fed.

The single currency remained in decline in Asia and briefly fell to session lows at 1.1911 early in the European morning, however, the price quickly wiped out losses on the release of bullish German PMIs and hit highs from the session at 1.1969 in New York morning on the broad USD. -based on weakness before falling to 1.1920.

Reuters claiming that a services boom pushed German private sector growth to its highest level in more than a decade in June, a survey found on Wednesday suggesting that Europe’s largest economy ended the second quarter on solid foundations. The increase is due to a sharp increase in the preliminary services PMI to 58.1 in June from 52.8 in May, as authorities continue to ease COVID-19-related restrictions in light of the drop in infections and increasing the number of vaccinations.
The flash PMI for manufacturing climbed to 64.9 from 64.4 the previous month, indicating occupied factories across the country despite bottlenecks for semiconductors and other intermediate goods.

The British pound fell to a session low of 1.3924 in the Asian morning before rising to 1.3987 early in the European morning due in part to cross-buying of the British pound, particularly against the euro. The pair then rose to an intraday high at 1.4001 in the New York morning before retreating to 1.3952 on a broad rally in USD.

On the data side, Reuters reported that a measure of US factory activity reached an all-time high in June, but manufacturers are still struggling to find raw materials and skilled workers, dramatically increasing prices for businesses and consumers. Data firm IHS Markit said on Wednesday its US flash manufacturing PMI hit 62.6 this month. It was the highest since the survey was expanded to cover all manufacturing industries in October 2009 and followed a final reading of 62.1 in May.

Data to be released Thursday:

Import prices in Germany, Ifo business climate, current Ifo conditions, Ifo expectations, France business climate, BoE interest rate decision in UK, purchase program of assets, total BoE QE, purchases of corporate bonds by BoE QE, increase in BoE MPC vote, BoE vote unchanged, BoE vote cut, US durable goods, goods Durables excluding transport, durable goods excluding defense, GDP, PCE prices, trade balance, wholesale inventories, initial jobless claims, continuous jobless claims, KC Fed manufacturing and Cana average weekly earnings.

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