​U.S. dollar registers biggest weekly rise since February

2023-05-15
Summary:

The dollar rose on Friday but a gauge of global stocks retreated on a report that showed U.S. consumer sentiment slumped to a six-month low in May.

The dollar rose on Friday but a gauge of global stocks retreated on a report that showed U.S. consumer sentiment slumped to a six-month low in May.


The dollar rose 1.4% for the week, its biggest weekly gain since September, as concerns about the government's borrowing cap and Fed’s monetary policy prompted a shift to safe havens.


Oil prices settled more than 1% lower on Friday, falling for the fourth consecutive week, as the market balanced supply fears against renewed economic concerns in the United States and China.


Commodities

U.S. oil rigs fell by two to 586 last week, their lowest since June 2022, while gas rigs plunged by 16 to 141, their lowest April last year.


The market drew some support from the forecast emerging supply deficit for the second half of the year, even as Iraq's oil minister Hayan Abdel-Ghani told Reuters on Friday he does not expect OPEC+ to decide on further production cuts when it next meets in Vienna on June 4.


The market also drew support after U.S. energy secretary Jennifer Granholm signalled that the country could repurchase oil for the Strategic Petroleum Reserve (SPR) after completing a congressionally mandated sale next month.


Forex

Longer-dated Treasury yields ended the week lower though the yield on benchmark 10-year notes was up 6.7 basis points to 3.464% - on bets the Fed will stop hiking rates at its next meeting in June.

Dollar

Fed Governor Michelle Bowman said in prepared remarks that the U.S. central bank probably will need to raise interest rates further if inflation stays high. The consumer price index (CPI) and producer prices showed inflation is slowing.


There could be a situation where U.S. inflation decelerates further and the dollar's value declines, with European inflation staying high, said Thierry Wizman, Macquarie's global FX & interest rates strategist in New York.

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