The US dollar was high as inflation concerns reemerged after major oil producers made a surprise announcement to diminish production further. Traders bet the Federal Reserve could have to hike prices and interest rates at their next meeting.
The publication by the Organization of the Petroleum Exporting Countries (OPEC) and its associates, recognized as OPEC+, appeared after data on Friday guided US consumer spending increased moderately in February after rising sharply in the previous month, with inflation showing signs of slowing, although it remained high.
“As the danger of broader contagion subsides, positive improvements in China and assumptions that the Fed is nearing the end of its tightening cycle should support broader sentiment as oil prices rise on an unexpected fall in output, posing new risks for China’s inflation,” said Christopher Wong, currency strategist at OCBC in Singapore.
Consequences of the Inflation
The euro fell 0.44% to $1.0791 after hitting a weekly low of $1.0788, while the Japanese Yen fell 0.46% to 133.41 to a dollar. Sterling traded at $1.2277, down 0.45% on the day. The dollar has risen to 0.32% against the Swiss franc.
The dollar index, which measures the US currency against six other currencies, rose 0.078% to 103.01, above 103 for the first time in a week.
OPEC+ cuts pushed oil prices up more than 6% on Monday.
The cuts were disclosed ahead of a virtual meeting of the OPEC+ ministerial group, which consists of representatives from Saudi Arabia and Russia, which is expected to remain at the already existing 2 million barrels per day (bpd) through the end of 2023.
Oil producers announced more on Sunday cuts, cutting production by about 1.16 million barrels per day(bpd).
Friday’s US Department of Commerce report showed that the personal consumption price index rose 5.0% in February a year earlier versus 5.3% growth in January. The underlying inflation measure –believed to be a better measure of future inflation – came in slightly lower than expected at 4.6%
The kiwi declined by 0.62% to $0.622, its largest one-day percentage decline since March 24.
The Australian dollar declined by 0.30% to %0.667 ahead of this week’s Reserve Bank of Australian meeting.
In cryptocurrencies, Bitcoin recently fell by 2.43% to $27,703.00. Ethereum recently fell y 2.27% to $1,776.40.