The US dollar had its biggest weekly rise in 11 against both the euro and the yen on speculation accelerating US inflation will force the Federal Reserve to raise its interest-rate target more than anticipated.
Demand for the US currency increased this week as the Fed boosted borrowing costs by a quarter percentage point for a seventh time since June. The yield on 10-year US Treasury notes rose to the highest since June, adding to the attractiveness of the dollar.
"The dollar is gathering momentum," said Takako Masai, head of foreign exchange and derivative sales in Tokyo at Calyon, the investment banking unit of Credit Agricole SA. "The theme of this market is a widening US rate advantage. People are pushing up expectations on the Fed's action this year."
The US dollar was at ?106.4 at 5pm in New York, from ?106.31 late on Thursday, according to electronic currency dealing system EBS. It was also at US$1.2960 per euro from US$1.2940. The dollar gained 2.8 percent against the euro and 1.6 percent versus the yen on the week, and may gain to ?108 and US$1.25 per euro in the next three weeks, Masai said.
Financial centers including Hong Kong, Singapore, London, Frankfurt and New York were on holiday on Friday.
Traders are increasing bets on the extent to which US rates will rise. Eurodollar futures contracts show traders and investors expect the Fed to raise its benchmark rate to at least 4 percent by the end of this year, from 2.75 percent, after the central bank on March 23 noted "pressures on inflation have picked up."
The December Eurodollar futures contract yields 4.315 percent, up from 3.905 percent a month ago. It settles at a three-month lending rate that has averaged about 0.21 percentage point higher than the Fed's target rate in the past 10 years.
Gains in the dollar may be limited by speculation the rally will prompt some investors to bet the advance is excessive.
A technical indicator suggested the dollar is poised to fall. Its 10-day relative strength index against the euro fell to 26.26, and against the yen was at 73.5. The index is a gauge of momentum in a given period, and a level above 70 or below 30 suggests a change in direction.
"The long weekend in Europe and the US will keep the market quiet, making it more likely the dollar will take a break from its rally," said Tetsu Aikawa, a currency sales manager in Tokyo at UFJ Bank Ltd. "The run-up has been fast enough to trigger concerns of a pause."
Citigroup Inc, the biggest financial services company, advised selling the dollar against the euro as it contested the view that the Fed is more likely to raise interest rates in larger increments this year.
"We disagree with this interpretation of the Fed's statement and disagree with the view that a 50 basis point tightening is more likely," Steven Saywell, chief currency strategist in London at Citigroup, wrote on Thursday in a report. The bank expects the dollar to drop to US$1.3670 per euro.
The Fed's benchmark rate exceeds the European Central Bank's key rate by three quarters of a point, the biggest gap since March 2001. The next US policy-setting meeting is May 3.
The US next week is forecast to say the economy added more than 200,000 non-farm jobs for a second month in March, according to a Bloomberg survey of economists.
US consumer prices rose 0.4 percent last month, the most in four months and more than the 0.3 percent median forecast in a Bloomberg survey of economists, the government said on March 23. A US Labor Department report the day before showed wholesale prices rose for a second month last month.
"The dollar's upward trend is going to continue," said Toru Umemoto, market analyst in Tokyo at Keio University's Global Security Research Center. "Yields are rising, and the US economy is strengthening. All of this is dollar supportive."
purpose: Tesla’s CEO sought to meet senior Chinese officials to discuss the rollout of its ‘full self-driving’ software in China and approval to transfer data they had collected Tesla Inc CEO Elon Musk arrived in Beijing yesterday on an unannounced visit, where he is expected to meet senior officials to discuss the rollout of "full self-driving" (FSD) software and permission to transfer data overseas, according to a person with knowledge of the matter. Chinese state media reported that he met Premier Li Qiang (李強) in Beijing, during which Li told Musk that Tesla's development in China could be regarded as a successful example of US-China economic and trade cooperation. Musk confirmed his meeting with the premier yesterday with a post on social media platform X. "Honored to meet with Premier Li
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Dutch brewing company Heineken NV on Friday announced an investment of NT$13.5 billion (US$414.62 million) over the next five years in Taiwan. The first multinational brewing company to operate in Taiwan, Heineken made the statement at a ceremony held at its brewery in Pingtung County. It also outlined its efforts to make the brewery “net zero” by 2030. Heineken has been in the Taiwanese market for 20 years, Heineken Taiwan managing director Jeff Wu (吳建甫) said. With strong support from local consumers, the Dutch brewery decided to transition from sales to manufacturing in the country, Wu said. Heineken assumed majority ownership and management rights
Microsoft Corp yesterday said that it would create Thailand’s first data center region to boost cloud and artificial intelligence (AI) infrastructure, promising AI training to more than 100,000 people to develop tech. Bangkok is a key economic player in Southeast Asia, but it has lagged behind Indonesia and Singapore when it comes to the tech industry. Thailand has an “incredible opportunity to build a digital-first, AI-powered future,” Microsoft chairman and chief executive officer Satya Nadella said at an event in Bangkok. Data center regions are physical locations that store computing infrastructure, allowing secure and reliable access to cloud platforms. The global embrace of AI