Dollar ends weeks with rapid growth
2023.02.17 09:06
Dollar ends weeks with rapid growth
By Tiffany Smith
Budrigannews.com – In early European trade on Friday, strong U.S. economic data and hawkish remarks from Federal Reserve policymakers pointed to additional interest rate hikes, propelling the U.S. dollar to a six-week high.
The, which compares the dollar to a basket of six other currencies, was 0.5% higher at 104.345 at 02:00 ET (7:00 GMT), putting it on track for a third week in a row of gains.
The number of Americans filing for jobs fell unexpectedly last week but increased in January, according to data released on Thursday.
After experiencing two consecutive monthly declines, this came in stronger than anticipated earlier in the week, following a sharp rebound in January.
In a note, analysts at ING stated, “The data provides ammunition for the Fed to remain in hawkish mode and for the market to continue to price two to three more 25bp Fed rate hikes by the summer.”
The Federal Reserve appears to have room to continue its campaign against inflation with more aggressive interest rates due to the apparent strength of the American economy.
The president of the Federal Reserve Bank of Cleveland stated that she had observed a “compelling economic case” for implementing yet another 50 basis point increase, and the president of the St. Louis Fed stated that he would not rule out supporting such an increase in March rather than a quarter point.
Bullard added that a Fed policy rate of 5.25 percent to 5.5% would be sufficient to slow price increases, which is higher than the 5% to 5.25 percent rate suggested by Fed policymakers in December.
Benchmark Treasury yields have reached their highest levels since late December as a result of this hawkish stance.
Other markets saw a 0.3% decline to 1.0633, its lowest level since January 9 as a result of the rising dollar.
On Thursday, the Chief Economist of the European Central Bank took a somewhat dovish stance, stating that the recent increases in borrowing costs have not yet had much of an effect on inflation.
fell 0.4% to 1.1941, a six-week low, following a stronger-than-anticipated 0.5% month-over-month increase in the United Kingdom in January.
with the yen under pressure as a result of the rise in yields in the United States, rose 0.6% to 134.74, reaching its highest level since late December.
The direction of monetary policy under the new Bank of Japan Governor, Kazuo Ueda, who will be confirmed next week, remains highly uncertain.
The daunting task of guiding the Japanese economy through rising inflation and sluggish economic growth is incumbent on Ueda.
Despite China’s top leaders declaring a “decisive victory” over COVID-19, the risk-sensitive fell 0.5% to 0.6842, close to a one-month low, while the risk-sensitive rose 0.2 percent to 6.8765.
