3d illustration of dollars rising charts with red arrow
  • Dollar trading at 112.64 on Friday morning
  • Higher inflation data helps to strengthen USD
  • Dollar weakens slightly against GBP and EUR

The USD surged to a new six-month high against the Japanese yen yesterday and held its ground against a basket of other major currencies after US inflation data showed another sharp increase in prices. This boosted the chances for two more rate hikes this year, hence the stronger dollar.

By yesterday morning, the USD/JPY was trading 0.35% higher at 112.37, the best level since January 10. It also strengthened 1% during the previous session.

Just after 5:00 am GMT on Friday, the USD/JPY rate was 112.64.

The relatively strong economic data helped to counteract worries about an escalating global trade war that increased in intensity on Wednesday when the US threatened to impose tariffs on another $200bn worth of Chinese products.

Investors are still worried that the ongoing spat between the two countries could develop into a full-blown international trade war that could stunt global growth.

The US dollar index, a measure of the USD’s strength against six of the largest global currencies, remained flat near its one-week high of 94.44 after increasing 0.67% the day before.

The euro moved marginally higher, with the EUR/USD trading at 1.1687 (+0.12%). This was nevertheless still lower than Monday’s high of 1.1790.

The GBP was also trading at a slightly higher level of 1.3215 against the USD, with investors awaiting the release of the British government’s Brexit white paper outlining the relationship the UK wants with the EU after Brexit.

The CAD traded near 1.5-week highs, with the USD/CAD reaching 1.3201. This can mainly be ascribed to the Canadian central bank increasing interest rates earlier this week after inflation came in on target and buoyant labor market data was released.

The AUD/USD rate, meanwhile, improved by 0.22% to 0.7384.

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