The U.S. dollar weakened against major currencies and European stock markets hit record highs as traders bet that the U.S. central bank is looking for signs of rising inflation to keep interest rates close to zero.

The U.S. dollar index, which measures the exchange rate of the U.S. dollar against a basket of trading partners’ currencies, fell 0.2% on Tuesday to its lowest level so far in 2021. In the past year, the index has fallen by more than 10%.

The pound to dollar exchange rate rose 0.3% to 1.4199 US dollars, close to the highest level since February. The exchange rate of the euro against the dollar rose 0.3% to $1.2246, the highest level since January.

John Roe, head of the multi-asset fund at Legal & General Investment Management, said: “People think that inflation in the United States is temporary. This has become a consensus.”

In the stock market on Tuesday, the European Stoxx 600 index rose 0.3%, setting a record high. London’s FTSE 100 index was flat, and the rise of the pound against the dollar dragged down the export index. The Swiss market index also rose by 0.6%, setting a new record.

U.S. overall consumer price index rises 4.2% In the 12 months to April, this was the largest increase in 13 years, more than double the Fed’s 2% target.

The Fed sees this increase as a temporary surge related to the imbalance between supply and demand, however, following the reopening of industries that were closed by the coronavirus last year. Since the early 1980s, although the central bank has been using higher interest rates to control inflation, Federal Reserve Chairman Jay Powell has adopted the most influential interest rate setter policy in the world. New Direction By explicitly tolerating short-term price increases, rather than increasing borrowing costs and risking a post-pandemic economic slowdown.

Solita Marcelli, chief investment officer for the Americas of UBS Wealth Management Company, said: “The market has pushed expectations of the Fed’s interest rate hike into the future.” “This supports our view of the weak dollar. .”

Economists surveyed by Bloomberg predict that US personal consumption expenditure is the Fed’s preferred inflation indicator, which excludes more volatile components such as food and energy. The index increased by 2.9% year-on-year in April.

but Five years The forward inflation rate is the market’s measure of the rise in US prices over time. After climbing to 2.37% at the beginning of this month, it has fallen to 2.24%.

I believe that over time, inflation will erode the fixed interest income paid to bondholders. This is temporary and has supported the price of US Treasury bonds in recent months.The benchmark 10-year U.S. Treasury bond yield is approaching 1.8% When inflationary tensions in the first quarter of this year increased.

As US interest rate prospects eased the pressure on borrowers in emerging markets, China’s Shanghai and Shenzhen 300 Index closed up 3.2%.

International oil benchmark Brent crude oil fell 0.4% to 68.23 US dollars per barrel.