5/1/2024

The dollar approached a one-year high

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Key points:

  • The US dollar is near its highest level since November 2023.
  • The euro, pound sterling and Swiss franc fell.
  • The Japanese yen weakened 0.08% to 157.92 per dollar. The Bank of Japan may raise interest rates.

The US dollar has shown steady growth, approaching its highest level since November last year. This happened ahead of the US Federal Reserve’s interest rate decision. The dollar’s rise was supported by data published on Tuesday, April 30, which showed increasing inflationary pressure in the American economy.

Currency dynamics

The US Dollar Index, which tracks the dollar against six major world currencies, rose 0.066% to 106.370. Earlier in the day, it was approaching 106.51, which would have been its highest level since November 1, 2023.

The euro fell slightly to $1.0623, after falling 0.52% the previous day on data showing a rise in the US dollar. Data released Tuesday showed U.S. labor cost growth accelerating in the first quarter of 2024.

The pound sterling exchange rate against the US dollar decreased by 0.06%, reaching $1.2482. Over the year, the pound sterling lost 1.9% of its value.

The Swiss franc fell to its lowest level since October 2023 at 0.9223 per dollar on Wednesday. The depreciation of the franc followed an unexpected interest rate cut by the Swiss National Bank in March 2024.

The possibility of adjusting the yen exchange rate remains open

The Japanese yen weakened 0.08% to 157.92 per dollar. Earlier in the day it was close to 158, but then rose slightly.

Traders attribute the sharp rise in the yen observed on Monday to the purchase of the currency by the Japanese authorities. The yen then reached 154.4, its highest level since 1990. Before that, it fell to a 34-year low of 160.25.

Investors’ expectations that Japanese interest rates will remain low relative to U.S. rates have pushed the yen down about 12% this year.

At the same time, investors missed signals that Japan’s central bank could raise rates in stages over the coming years. The first rate increase is possible in the fall.

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