United States dollar hits June highs after data backs continued Fed tightening

US stocks stocks fall Federal Reserve Bank of America Merrill Lynch New York

Stocks rose on Wednesday, but worries about stretched valuations and caution before a near-certain rate hike by the U.S. Federal Reserve kept their gains in check, while the dollar steadied against a basket of major currencies.

Wednesday saw EUR/USD jump to a high of 1.1288, which was the pair's best level since August 2016.

"We could put this into effect relatively soon", Fed Chair Janet Yellen said at a press conference in Washington, a comment that caused longer-dated Treasury yields to rise from low levels earlier in the trading day.

Equity traders have suffered a fraught week as the crisis engulfing Donald Trump picks up pace, technology firms tumbled from recent highs and energy plays were hammered by plunging oil prices.

The MSCI All-Country World index .MIWD00000PUS was up 0.1 percent and has remained stuck in a tight range this month.

The Eurozone's April trade balance data also disappointed on Thursday.

What emerges from the Fed meeting "is certainly going to chart the course for a lot, including the strength of the dollar", said Bill Northey, chief investment officer at the private client group of U.S. Bank in Helena, Montana, who spoke from Minneapolis.

This week's U.S. data was relatively low influence until Wednesday's inflation stats were published. The dollar index was last down 0.06 per cent, with the euro unchanged at US$1.1214.

Gold turned negative after the Fed rate increase.

The Fed has a 2 percent inflation target and tracks an inflation measure which is now at 1.5 percent. Monday's monthly budget statement from May was slightly worse than expected at $-88b and consumer inflation expectations from May slipped from 2.79% to 2.59%.

Meanwhile, the Yale University economics professor explained that a big risk could be a decline in the prices of 10-year Treasury notes. This is because analysts and investors are still uncertain about the likelihood of a third 2017 rate hike, with bets still below 50%.

It was last little changed against the USA dollar at US$1.2757.

The Empire State manufacturing index climbed to 19.80 in June from -1.00 the previous month, compared to expectations for a reading of 4.00.

Thursday will see the publication of May's inflation stats from France and Italy, with final May inflation results for the overall Eurozone being published on Friday.

Mumbai: The rupee lost 15 paise to trade at a fresh two-week low of 64.68 against the dollar in early part today as the American unit strengthened overseas on upbeat data.

As for United States data Friday's MI consumer sentiment survey from June, as well as May building permit and housing start reports could influence the "Greenback".

However, investors don't know what to expect next from the Fed amid rising United States political and economic uncertainty.

Next week's Eurozone data PMI is likely to influence EUR/USD exchange rates, but investors may react to the final round of French legislative elections when markets open on Monday morning.

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