Global growth worries send dollar to new 20-yr high

 

By Chuck Mikolajczak, Reuters

via StreetInsider.com - May 11, 2022 

 

NEW YORK (Reuters) - The dollar climbed to a fresh 20-year high on Thursday as concerns persisted that central bank actions to drive down high inflation would crimp global economic growth, boosting the currency's safe-haven appeal.

 

Data from the Labor Department showed weekly initial jobless claims rose to their highest level in three months, although the labor market remains a strength of the U.S. economy. On the inflation front, the producer price index showed a sharp deceleration in April to a 0.5% rise from the 1.6% surge the prior month, thanks in part to a sharp drop in energy products.

 

In the 12 months through April, the PPI increased 11.0% after accelerating 11.5% in March and above an estimated increase of 10.7%.

 

"PPI slightly mixed to slightly less than expected today but overall there is still a lot to worry about... if S&P sells off again that is going to be broadly supportive of dollars," said Erik Bregar Director, FX & Precious Metals Risk Management at Silver Gold Bull Inc in Toronto.

 

The dollar index rose 0.798% at 104.840 after touching 104.92, its highest level since Dec. 12, 2002. The euro down 1.38% to $1.0366 after falling to 1.0352, its lowest since Jan. 3, 2017.

 

After the Fed raised its benchmark overnight interest rate by 50 basis points last week, the largest hike in 22 years, investors have been attempting to assess how aggressive the central bank policy path will be. Expectations are completely priced in for another hike of at least 50 basis points at the central bank's June meeting...

 

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