The U.S. dollar is recovering from post-Fed weakness, picked up by higher yields

NEW YORK (Reuters) – The dollar climbed broadly on Thursday, as U.S. Treasury yields helped it reverse all losses from the previous session after pushing back the Federal Reserve against expectations market of potential interest rate hikes.

The U.S. dollar index was 0.53% higher at 91.853, after falling 0.56% to a two-week low of 91.30 earlier in the session.

The U.S. economy is experiencing the strongest growth in nearly 40 years, even though central bank policymakers are promising to keep their foot on the gas despite rising inflation. expect, the Fed said Wednesday.

While inflation is expected to jump to 2.4% this year, above the central bank’s 2% target, Fed Chairman Jerome Powell who is seen as a temporary rise said the Fed’s promise to meet its benchmark overnight will not change kept close to zero.

“Markets are playing chicken with the Fed, promising that the central bank’s response action will change once today’s ultra-dovish policy stance succeeds in generating inflation above target,” he said. Karl Schamotta, chief market strategist at Cambridge Global Payments.

“Traders are pretty much committed to Powell’s success in proving himself wrong. This reinforces interest rate disparities in favor of the dollar and rate-sensitive currencies on a global basis, ”he said.

Following Fed’s report on Wednesday, the 10-year benchmark yield returned from a 13-month high of 1.69% hit early Wednesday. On Thursday, yields on the 10-year bond recently resumed their rally to hit a new 13-month high of 1.754%.

Graphic: Playing catch-up,

Data showing the number of Americans filing new claims for unemployment benefits rose unexpectedly last week only to shake yields and lower the dollar.

Against the yen, the dollar gained 0.13% to 108.98 yen.

A report from Nikkei said that the Bank of Japan (BOJ) was expected to extend a slight bond in which it will allow long-term interest rates to move around their 0% target.

Elsewhere, the Norwegian crown reached its strongest level against the euro in 13 months – 10.0223 crowns per euro – before a reversal of profit after the Norwegian central bank left its main interest rate unchanged at a 0.0% low. Thursday and moved its forward guidance to show that a rate hike may continue in the second half of this year.

The euro finally rose 0.5% at 10.1274 crowns.

Sterling fell against the dollar as the Bank of England warned that the outlook for Britain was not clear, reducing some profitability that the bank would show a more optimistic outlook.

The pound was 0.3% lower at $ 1.3930.

In the cryptocurrency market, bitcoin fell 1.21 to $ 58,188.21, after hitting $ 60,000 again.

“The price turnout from $ 61,000 … caught many of the ships, which subsequently smelted when bitcoin slipped,” said Pankaj Balani, chief executive at Delta Exchange’s crypo derivatives platform.

“This move has encouraged traders and boosted profits but is not like a short-term correction. Bitcoin remains bullish over time to medium term. ”