Stocks gain, dollar softens as peak inflation bets rise
The dollar softened against major currencies and European stocks ticked higher on Thursday as easing U.S. inflation expectations reinforced investor confidence of a let up in price pressures.
The Japanese yen inched closer to the four-month peak it scaled against the dollar on Tuesday after a hawkish policy tweak by the Bank of Japan fuelled widespread bets that the most dovish central bank of 2022 would roll back monetary stimulus.
Easing gas prices pulled U.S. consumer 12-month inflation expectations down to 6.7% this month, the lowest since September 2021, data showed on Wednesday.
Meanwhile consumer confidence rose to its highest reading since April, beating expectations of economists polled by Reuters and sparking a rally on Wall Street that lifted beaten-down European stocks on Thursday.
While the US Federal Reserve raised its main interest rate by 50 basis points in its seventh hike of the year in December, money managers are expecting the world’s most influential central bank to soften its stance as inflation ebbs lower.
“The view is that we are getting close to the end of rate hikes and perhaps there will be a (Fed) pivot,” said Anish Grewal, portfolio manager at London-based hedge fund Enora Global.
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