Macro data continues to support dollar
2023.02.21 13:37
Macro data continues to support dollar
By Kristina Sobol
Budrigannews.com – On Tuesday, economic data continued to point to the resilience of the U.S. economy and the likelihood that the Federal Reserve will keep interest rates higher for a longer period of time. Despite the dollar’s decline against the pound, it maintained its position against the majority of its peers.
A survey released on Tuesday found that unexpectedly, business activity in the United States increased in February to its highest level in eight months.
This is in line with recent solid data on manufacturing production, the labor market, and retail sales, all of which point to solid momentum in the economy at the beginning of the year.
Adam Button, chief currency analyst at ForexLive in Toronto, stated, “It’s increasingly clear that the U.S. isn’t in any kind of a recession at the moment nor are there signals of a recession.”
“The possibility of a recession in 2023 has been seriously reconsidered by the market. “The odds are getting higher that the Federal Reserve will have to raise rates to 6% later this year,” he added. “The U.S. economy has gotten by with higher interest rates so far.
The euro was last down 0.19 percent against the dollar to $1.0666 after data showed that manufacturing activity in the euro zone was getting worse. However, gains were kept under control by a rebound in the services sector, which is more sensitive to inflation.
The notable exception was the British pound, which extended its gains against the US dollar of the previous two days by 0.38 percent to $1.2081.
The remained at 103.87, or up 0.02%, which tracks the U.S. currency against six major peers. slightly lower than the previous day’s high of 104.26.
The British economy may be avoiding a recession, according to data that showed an unexpected uptick in business activity on Tuesday, which led to a rise in the pound.
Over the past few weeks, strong U.S. labor data and indications of persistent inflation have raised the likelihood that U.S. interest rates will rise further than many anticipated. As a result, the euro has struggled against the dollar in particular.
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