By Peter Nurse
Investing.com – The U.S. dollar edged lower in early European trading on Thursday as the world’s top finance ministers met, but remains high amid expectations of aggressive monetary tightening from the Federal Reserve.
As of 03:15 ET (07:15 GMT), the , which tracks the greenback against a basket of six other currencies, was trading down 0.3% at 100.165, pulling back from the more than two-year high of 101.03. observed earlier in the week.
Benchmark U.S. Treasury yields fell from their highest level since December 2018 to nearly 3%, helping the dollar return some recent gains.
However, the dollar remains particularly strong against the Japanese yen, rising 0.1% to 128.05, above the two-decade high of 129.43 seen earlier in the week after the Bank of Japan once again intervened in the bond market to defend its record level. performance target.
Japan’s finance minister said on Thursday he had explained the “somewhat rapid” declines in the yen to his Group of Seven counterparts and was due to meet with US Treasury Secretary Janet Yellen later this week.
In a statement released after their meeting, the leaders said they were watching closely as global financial markets have been “volatile”, creating some nervousness over whether the G7 could act to counter the rapid moves.
“We had estimated that intervention in the FX market would not be seen until the 130 level and even now it is difficult to describe market conditions as disorderly enough to warrant intervention,” ING analysts said. in a note.
The Federal Reserve chairman is expected to speak later Thursday at the IMF and World Bank Spring Meetings in Washington.
His comments will be carefully considered with the Fed’s meeting in early May front and center as the central bank is expected to hike more aggressively than the quarter-percentage-point move it did. announced at its March meeting.
Elsewhere, it rose 0.4% to 1.0890 as Vice President Luis de Guindos joined a growing chorus of European Central Bank officials acknowledging the possibility of an interest rate hike. interest from July with inflation reaching record levels in the European Union.
That said, the pair remains slightly above the 20-month low of 1.0757 as the war in Ukraine weighs heavily as well as the uncertainty surrounding the French political presidential election.
There could be further weakness ahead as the euro is used less often as a global payment currency, posting its biggest percentage point decline in more than a decade in March, according to data from the Society for Worldwide. Interbank Financial Telecommunications, or SWIFT.
fell 0.2% to 0.7436, while it rose 0.5% to 6.4501, hitting its highest level since October 2021 amid concerns over a slowdown in growth induced by COVID in the world’s second largest economy.
A prolonged slowdown in China would have substantial global fallout, IMF Managing Director Kristalina Georgieva said on Thursday, days after the organization cut its growth forecast for China this year to 4.4%, well below of the Beijing target of around 5.5%.