Dollar rises as US data fuel talk of rate hike – AFP

dollar to naira

The dollar broadly rose Wednesday as another positive round of US data fanned speculation the Federal Reserve will lift interest rates, while central banks elsewhere consider stimulus measures to kickstart growth.

A decision by the International Monetary Fund to cut its global growth projections for this year and next also lifted the greenback against higher risk units as dealers sought out safety. New home construction in the US rose in June at its best pace in nine months, official data showed Tuesday.

The figures are the latest to indicate the world’s top economy is getting on to a sure footing following a blockbuster jobs creation report at the start of the month and news that retail sales had picked up.

The greenback has soared since the jobs data, which came as central banks and leaders from — among others — Japan, Britain and Europe indicate they will loosen monetary policy to negate the effects of Britain’s shock vote to leave the EU.

On Tuesday the new finance minister in London Philip Hammond said the Bank of England must act to stimulate the economy. While the BoE this month held off cutting rates, it did say it would likely announce a reduction in August.

In Asian trade the pound fell to $1.3079 from $1.3101, having sat around $1.3250 at the start of the week. The British unit is heading back towards the 31-year lows below $1.28 touched in the weeks after the June 23 Brexit vote.

The euro fetched $1.1006, down from $1.1023

The dollar also rallied against higher-yielding currencies, with South Korea’s won down 0.4 percent, the Indian rupee losing 0.1 percent and Indonesia’s rupiah also 0.1 percent lower.

The Turkish lira plunged 2.5 percent as traders fret over a government crackdown following the weekend’s failed coup attempt. The country has been thrown into turmoil by the deadly events and the resulting purges have fuelled uncertainty.

Ratings agency Moody’s said it would “assess the medium-term impact” of the crisis before deciding on whether to lower Ankara’s credit rating. An interest rate cut by the central bank added extra pressure to the lira.

The dollar was almost unmoved at 106.05 yen against 106.08 yen but analysts said the outlook was strong for the greenback if the Bank of Japan decides to add to its already massive monetary stimulus at next week’s policy meeting. The greenback is up about six percent against the yen this month.

Stephen Innes, senior trader at OANDA Asia Pacific, said in a note: “An overwhelming percentage of investors are expecting Japanese policymakers to deliver, which should make the topside on (the dollar/yen) the favoured short-term position.”

However, if the BoJ makes no announcement, the dollar may drop more than three percent, according to a Citigroup global FX survey, Bloomberg News reported.