Expectations increasingly indicate that US and global interest rates could rise further, after the Bank of Canada and the Reserve Bank of Australia made sudden interest rate increases this week.
On Wednesday, the Bank of Canada raised the overnight interest rate to the highest level in 22 years to 4.75% after a four-month hiatus, while the Reserve Bank of Australia raised rates on Tuesday. of interest by a quarter of a point at the highest level. in 11 years, preventing further increases in the future.
The Canadian dollar settled in recent trades at 1.3365 per dollar, after hitting a one-month high of 1.3321 per dollar in the previous session.
“The Bank of Canada is signaling that more rate hikes may be coming and that’s got everyone reconsidering that the Fed will take a break from July’s rate hike,” said Edward Moya, senior market analyst at OANDA.
The US dollar fell overall in early Asian trading, with the pound rising 0.08% to $1.2449 and the euro rising 0.08% to $1.0707.
Against the yen, the dollar fell 0.21% to 139.85, with the Japanese currency supported by data on Thursday showing the country’s economy grew 2.7% year-on-year in the first quarter, a rate well above an initial estimate of 1.6%. growth.
The dollar index fell slightly to 104.02, but was not far off the two-month high it hit last week as Treasury yields rose.
The 10-year Treasury yield hit 3.7914%, after rising nearly 10 basis points to peak at 3.801% on Wednesday.
Financial markets are expecting a 29% chance that the US central bank will raise interest rates by 25 basis points at next week’s policy meeting.
The offshore Chinese yuan held near its lowest level in more than six months at 7.1469 per dollar, after falling to 7.1527 in the previous session, its lowest since late November.
Data released on Wednesday showed China’s exports fell much faster than expected in May while imports continued to fall, raising doubts about the country’s fragile economic recovery.
The Australian dollar rose 0.18% to $0.6665, after falling almost 0.3% in the previous session, while its New Zealand counterpart rose 0.22% to 0.6050. $, offsetting some of the 0.7% decline it posted yesterday, Wednesday.
The Turkish lira fell to a record low of 23.39 to the dollar.
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