USD advances on interest rate expectations

Story link: USD advances on interest rate expectations

The US dollar advanced in relation to the euro and sterling on Tuesday in anticipation of an expected rise in interest rates during the meeting of the US Federal Reserve, which began today.

The dollar advanced 0.7 percent to $1.2073 against the euro. It also gained 0.7 percent against sterling, to $1.8160.

The New Zealand and Australian dollars both lost ground to the US dollar.

The Australian dollar fell 0.7 percent to $0.7643 in relation to the US dollar, while the New Zealand dollar fell by 0.9 percent to $0.701 against the US dollar.

New Zealand reported a trade deficit of NZ$25 million in May, which sent the annual deficit to its highest level since the mid-1970s.

Meanwhile in Asia, the South Korean won and the Japanese yen both declined in relation to the US dollar on Tuesday as rising oil prices led to worries that the nations’ balances of payments could be threatened since neither one has significant oil reserves.

Japan’s trade surplus has fallen to a 4-year low mostly due to oil imports. The governor of South Korea’s central bank, meanwhile, said on Tuesday that higher oil prices could take 0.7 percentage points off the growth of Korea’s gross domestic product this year.

The won declined by 1.1 percent against the US dollar to Won1,024, a two month low. The yen lost 0.8 percent to an eight-month low of ¥110.07 in relation to the US dollar before recovering slightly to ¥109.91 by the end of the trading day.