© Reuters. FILE PHOTO: A U.S. one hundred dollar bill and Japanese 10,000 yen bills are seen in this photo illustration in Tokyo, February 28, 2013. REUTERS/Shohei Miyano/File Photo
By Chuck Mikolajczak
NEW YORK (Reuters) – The dollar fell on Tuesday after rising the day before as comments by U.S. Federal Reserve Chairman Jerome Powell faded and rising stock markets helped boost risk sentiment.
The greenback had its biggest one-day percentage gain since March 10 on Monday, as Powell opened the door to a rate hike of more than 25 basis points in upcoming policy meetings to combat the inflation.
Traders are pricing in a 66.1% chance of a 50 basis point hike at the Fed’s May meeting, according to CME’s FedWatch tool https://www.cmegroup.com/trading/interest -rates/countdown-to-fomc.html?redirect=/trading/interest-rates/fed-funds.html, up from just over 50% a week ago.
In the wake of Powell’s comments, Goldman Sachs (NYSE:) now expects the central bank to raise interest rates by 50 basis points at its May and June meetings.
Investors were in a risk-taking mood as U.S. equities rose and eroded some of the greenback’s appeal as a safe haven, with stocks benefiting in part from a rise in bank stocks on expectations of Fed rate hike.
“For the dollar, it’s well supported by the Fed’s increasingly hawkish rate stance, but it’s off its highs, risk appetite has something to do with it, with stocks more highs that kind of temper the dollar’s gains,” said Joe Manimbo, senior market analyst at Western Union (NYSE:) Business Solutions in Washington, DC.
“At least for now, it looks like the market is giving the Fed the benefit of the doubt that it can foster a soft landing and that’s what’s underpinning risk appetite and capping gains in the market. dollar.”
The fall of 0.063%.
The yen continued its recent weakness as the Bank of Japan renewed its stance on keeping its ultra-loose monetary policy intact.
The yen hit a fresh six-year low at 121.03 and last weakened 1.03% against the greenback at 120.70 to the dollar.
The yen also suffered against other currencies, with the euro hitting a five-month high of 133.33 and its latest rise of 1.18% to $133.14. The Japanese currency fell to an over 6.5-year low against the Swiss franc at 128.91, as the franc last rose 1.48% to $128.89.
The euro rose 0.14% to $1.1029. The single currency has weakened over the past month as the conflict in Ukraine escalated and served to drive up energy prices. On Monday, European Central Bank (ECB) President Christine Lagarde said the Fed and the ECB would go out of sync because the war in Ukraine is having very different impacts on their respective economies.
ECB policy chief Francois Villeroy de Galhau said on Tuesday the central bank needed to look beyond short-term swings in energy prices and focus on underlying inflation trends.
The pound last traded at $1.3249, up 0.64% on the day.
In cryptocurrencies, the latest rose 4.18% to $42,874.48.
latest increase of 3.63% to reach $3,015.46.
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