US Dollar Rises Against Sterling, Euro Rallies
The US dollar rose against its major trading partners on Tuesday in the forex market except for a decline versus the euro, ahead of another busy day of economic data releases.
Earlier trading data showed that sterling crossed the $1.30 mark on Tuesday, the highest in over four months, driven by expectations that UK interest rates will stay higher for longer. The Bank of England is set to hold rates at 4.5% this week, with traders pricing in a slower pace of rate cuts compared to the Federal Reserve.
The euro, however, strengthened against the US dollar as investors look ahead to a key vote on the fiscal spending plans. The Bundestag will on Tuesday vote on reforming Germany’s debt brake to unlock funds for infrastructure and defence spending.
The prospect of high spending improves European growth expectations, and this should continue to support the euro, Swissquote Bank analyst Ipek Ozkardeskaya says in a note.
The Eurozone trade surplus narrowed much more than expected in January, and Eurozone economic sentiment improved in March, according to data released earlier Tuesday. The next European Central Bank meeting is scheduled for April 16-17.
GBPUSD fell to 1.2988 from 1.2992 at the Monday US close but was above a level of 1.2976 at the same time Monday morning. The next Bank of England meeting is scheduled for Thursday, when no change in rates is expected.
USDJPY rose to 149.6057 from 149.1719 at the Monday US close and 148.4991 at the same time Monday morning. Japanese service purchases declined in January, according to data released overnight.
The Bank of Japan meeting is expected to release its interest rate decision Tuesday evening. No change in rates is expected. USDCAD rose to 1.4288 from 1.4283 at the Monday US close but was below a level of 1.4352 at the same time Monday morning.
Canada’s consumer price index data for February are due to be released. The next Bank of Canada meeting is scheduled for April 16. #US Dollar Rises Against Sterling, Euro Rallies Yield Slides on Post Auction Demand for Nigerian Treasury Bills
