The dollar is rising, the pound sterling is near its highest levels on a yearly basis

The dollar is rising, the pound sterling is near its highest levels on a yearly basis

The dollar rose on Tuesday after a survey of loans showed credit conditions in the United States were less bleak than expected, while the pound touched a one-year high ahead of the Bank of England’s monetary policy meeting this week.

The Fed’s Senior Loan Officers’ Survey (SLOOS) showed that while credit conditions for US businesses and households continued to tighten at the start of the year, that was likely due to the impact of aggressive rate increases by the Fed rather than seriousness. strains in the banking sector.

The closely watched survey released Monday was one of the first gauges of sentiment in the banking sector since the recent series of bank failures, sparked by the March Silicon Valley bank collapse, sent global markets into turmoil.

The US dollar led Treasury yields slightly higher after the survey as traders lowered their expectations on the size of the Fed’s interest rate cuts needed later in the year to ease tensions in the sector.

The euro fell 0.16% to $1.0987, while the Japanese yen lost 0.1% to $135.24 per dollar.

The two-year Treasury yield remained above 4%, while the benchmark 10-year yield was at 3.5148%, after rising more than five basis points in the previous session. [US/]

“It wasn’t as bad as expected. There is still a tightening in credit conditions ahead… But overall, at this point, the survey doesn’t paint a picture of a credit crunch coming. I think it’s good news,” said Rodrigo Catrill, currency analyst at National Australia Bank (NAB).

Against a basket of currencies, the dollar index rose 0.05% to 101.49, but remained off recent lows as traders looked ahead to higher US interest rates.

“The dollar hasn’t really improved,” Cattrell said, referring to the poll. “It’s more of an outperformance of growth-friendly currencies, which has been bolstered by better commodity prices… I think that’s the most important.”

Oil prices rose more than 2% on Monday as fears of an imminent recession in the United States eased after the release of SLOOS and a strong jobs report on Friday.

Commodity currencies such as the Australian and New Zealand dollars fell in early Asian trade on Tuesday, but remained near multi-week highs hit in the previous session.

The Australian dollar fell 0.07% to $0.6776, after hitting a three-week high of $0.6804 on Monday.

The kiwi fell 0.11% to $0.6338, after hitting a one-month high of $0.63585 a day earlier.

Elsewhere, the pound fell 0.06% to $1.26105, but it was not far from the previous session’s one-year high of $1.2668, ahead of the central bank’s monetary policy meeting on Thursday.

The Bank of England looks set to raise interest rates to 4.5%, in line with quarter-point increases by the Federal Reserve and European Central Bank last week, as it tries to battle the highest rate of inflation in all of the major advanced economies.

“The Bank of England has been a bit of a hesitant promenade,” said NAB’s Cattrell. “It keeps saying it expects lower inflation and is concerned about the cost of living and the slowing economy.”

But the truth is that the UK economy has proven very resilient this year… The important thing is what the Bank says.

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