Dollar strengthens for the 11th consecutive week

(Patria) - In currency markets, the dollar's value rose for the 11th consecutive week, as US interest rates are expected to remain elevated for longer than anticipated, and the economy continues to grow solidly.

The dollar index, which tracks the value of the US dollar against six major world currencies, rose 0.55 percent last week to 106.17 points, hovering around a 10-month high.

The dollar strengthened by 0.7 percent against the European currency, with the euro falling to $1.0578.

The dollar's exchange rate also rose against the Japanese currency, by 0.7 percent, to 149.40 yen.

An 11-week streak of dollar strengthening has not been seen in almost 10 years, and thanks to this, the dollar strengthened by more than 3 percent against a basket of currencies in the past quarter.

Support for the dollar continues to come from recent assessments by Fed officials that due to elevated inflation, another 0.25 percentage point interest rate hike will be needed by the end of the year, to a range of 5.50 to 5.75 percent, and that interest rates could remain elevated for longer than expected.

Last week, it was announced that US gross domestic product (GDP) grew by 2.1 percent year-on-year in the second quarter, despite the Fed having raised interest rates by 5.25 percentage points since March of last year.

Although slowed, this is a stronger growth than in other Western economies. Inflationary pressures are easing slightly, Hina reports.

On Friday, a report on personal consumption expenditures was released, according to which inflation, for the first time in more than two years, fell below 4 percent. However, this is still significantly higher than the Fed's target of 2 percent.

"Prices have risen on a monthly basis, but overall inflation is easing. This is good news for the market because the Fed is monitoring the core inflation rate," says Peter Cardillo, an economist at Spartan Capital Securities in New York.

The dollar is strengthening due to expectations that the US economy will remain more resilient to elevated interest rates and oil prices than other major economies in the world, says Cardillo.