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Dollar Strengthens Amid Rising U.S. Yields, U.K. Inflation Boosts Pound

The Dollar experienced a boost on Wednesday due to rising Treasury yields. However, the pound also gained against the greenback as British inflation remained above 10% in March, pressuring the Bank of England to continue raising rates.


Skepticism Regarding Federal Reserve Rate Cuts Grows

An increase of 0.206% in the Dollar index, which measures the currency against a basket of its peers, reflects growing skepticism that the Federal Reserve will cut rates later this year.

Two-Year Treasury Notes Yield Reaches One-Month High

Yields on two-year Treasury notes, sensitive to U.S. central bank monetary policy expectations, rose seven basis points to 4.269%, reaching a one-month high of 4.286%.

Dollar's Gain Seen as Temporary by F.X. Strategist

Bipan Rai, North America head of F.X. strategy at CIBC Capital Markets in Toronto, believes the Dollar's gain is a reprieve and predicts the Dollar will face considerable pressure in the medium to long term.

Futures Pricing Indicates Possible Fed Rate Hike

According to CME's FedWatch Tool, futures pricing shows an 85.7% chance of the Fed hiking rates 25 basis points after a two-day meeting on May 3. However, the likelihood of a rate cut by December has significantly decreased this week.

U.S. Dollar Remains Defensive Amid Congressional Debt Ceiling

As noted by Rai, the Dollar has been on the defensive due to the unresolved debt ceiling in Congress and concerns about the migration of deposits in the U.S. banking system.


Sterling and Yen Rates Fluctuate Against the Dollar

Sterling traded at $1.244, up 0.13% on the day, while the Dollar rose 0.46% against the rate-sensitive yen at 134.71, briefly surpassing 135 for the first time in a month.

Dollar's Immediate Outlook Uncertain as Foreign Central Banks Hike Rates

Joe Manimbo, the senior market analyst at Convera in Washington, states that the immediate outlook for the Dollar is less than bullish as foreign central banks have more rate hikes planned than the Fed for the rest of the year.

U.K. Consumer Inflation Eases, Remains Western Europe's Highest

Data released on Wednesday revealed that U.K. consumer price inflation eased slightly in March to 10.1% from February's 10.4%, maintaining its position as the highest consumer inflation rate in Western Europe.

Banks Revise Expectations for British Interest Rates

Deutsche Bank and Morgan Stanley have revised their expectations for British interest rates, with Deutsche Bank anticipating two additional 25 basis point rate hikes from the Bank of England and Morgan Stanley predicting one with a risk of a second.