NEW YORK: The dollar edged higher on Tuesday as traders set aside a fairly strong reading of consumer price data and tried to gauge whether the Federal Reserve will hike interest rates next week after the collapse of two banks sparked widespread market unease.
The dollar index, a measure of the dollar against six other currencies, rose 0.096 percent as Treasury yields jumped a day after the two-year note, which moves in step with interest rate expectations, fell the most in a single day since 1987.
The euro eased 0.11% to $1.0717, but the dollar gained against the safe-haven yen and Swiss franc.
Fed funds futures also showed a change in mood as the strong likelihood the Fed would stand pat at the end of its two-day policy meeting on March 22 dissipated, with that probability falling to 13.6%, according to CME’s Fed Watch Tool.
Investors are mixed on whether the still solid rise in inflation will push the Fed to raise rates again next week after the collapse of Silicon Valley Bank and Signature Bank caused turmoil in financial markets.
Higher US interest rates than that of foreign government debt has been a driver of dollar strength this year.
The Japanese yen weakened 1.05% at 134.62 per dollar, while the greenback rose rose 0.32% against the Swiss franc.
Sterling was down 0.16% at $1.2162 after jumping 1.22% on Monday. Data on Tuesday showed UK pay growth slowed in the three months to January.
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