Dollar under pressure due to Powell’s speech on easing monetary policy
2023.02.08 11:59
Dollar under pressure due to Powell’s speech on easing monetary policy
By Ray Johnson
Budrigannews.com – After Fed chair Jerome Powell’s relatively dovish speech raised hopes that the central bank may soon ease monetary policy, the U.S. dollar edged lower in early European trade on Wednesday.
The, which tracks the dollar against a basket of six other currencies, traded 0.3% lower at 103.005 at 03:10 ET (08:10 GMT), following a 0.3% decline in the previous session.
Particularly in light of the unexpected strength of the U.S. jobs report on Friday, the foreign exchange market had anticipated that it would respond negatively to expectations of an easing of rates.
Instead, Powell reiterated that he believed a process of disinflation was underway and acknowledged that it might need to move higher than anticipated if economic conditions remained strong.
However, dollar losses are limited, and the index is still close to Tuesday’s one-month high despite the fact that the number of jobs added on Friday increased by 517,000, raising expectations that the Fed will need to keep raising interest rates.
In a note, analysts at ING stated, “The overall environment is doing little to lure markets back into risk assets and away from the safe-haven dollar.” The Eurozone cannot rely on a steady flow of positive data to continue the growth rating process, as tensions between the United States and China are a source of concern and likely weigh on global sentiment.
The risk-sensitive rose 0.3 percent to 0.6979, rebounding from Tuesday’s one-month low of 1.1961, and traded 0.3% higher at 1.0751, after falling to 1.0669 in the previous session, its lowest since Jan. 9.
after falling 1.2% in the previous session, it fell 0.1 percent to 130.98. Whoever will become the next Governor of the Bank of Japan is still the primary topic of discussion.
On Wednesday, Japanese Prime Minister Fumio Kishida stated that the new governor of the BOJ must have excellent communication skills and the capacity to work closely with other central banks around the world.
fell 0.3 percent to 82.612 following the widely anticipated 25 basis point increase in interest rates. However, the announcement that core inflation remained high left the door open for additional tightening, surprising the markets.
