At around 6:20 GMT on Friday, the dollar was up 0.40% against the euro, at 1.1623 dollars per euro, and rose by 0.58% against the British pound, at 1.3323 dollars per pound.
“The American dollar is finishing the week on the rise” while “oil prices are increasing and global stock markets are falling,” summarized analysts at Scotiabank.
The hope on Thursday was that the Trump-Xi meeting could result in some positive headlines (including on Iran) that would have capped the greenback and boosted risk sentiment, but “for now, it’s too little,” noted Francesco Pesole of ING.
The American president only mentioned encouraging words from Xi Jinping, stating that China would not provide arms to Tehran and that it could contribute to the reopening of the Strait of Hormuz.
This status quo is fueling fears of a generalized acceleration of inflation.
“American data released this week clearly showed that price pressures persist,” noted Scotiabank experts.
Producer price inflation (PPI) jumped in April in the United States, up to +6% from +4.3% in March. The consumer price index (CPI) reached 3.8% on an annual basis last month, the highest in over three years.
“This leads the markets to anticipate a higher likelihood of a Fed rate hike this year,” observed Scotiabank analysts.
A monetary tightening would be supportive of the dollar.
Meanwhile, the pound continues to weaken with the intensification of movements from potential rivals of Prime Minister Keir Starmer within the Labour Party.
Markets particularly fear “the prospect of a major leftward turn that would thwart growth and deepen an even larger deficit in British public finances,” summarized Kathleen Brooks, an analyst at XTB.
Already boosted by an uncertain global economic context due to the war, British government bond interest rates climbed on Friday.
The 10-year rate soared to 5.180%, a level not seen since the 2008 financial crisis, while the 30-year rate reached a peak since 1998, at 5.858%.
[Context: The article discusses the impact of geopolitical events on currency markets and inflation rates.]
[Fact Check: The content mentions specific exchange rates and interest rates in relation to the dollar, euro, British pound, and Japanese yen.]
