iifl-logo

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

sidebar image

Dollar near 3-month high

9 Mar 2023 , 08:40 AM

 Federal Reserve Chairman Jerome Powell’s statement that interest rates would need to rise and possibly accelerate in order to slow inflation dominated sentiment on Thursday and pushed up the dollar to a three-month high.

Powell reiterated his hawkish stance during the second day of his testimony to Congress on Wednesday, but he also struck a cautious tone, saying that the debate over the size and direction of future rate hikes was still in progress and would be based on facts.

As a result, the U.S. dollar was forced to halt its spectacular run from earlier in the week, sliding from nearly a three-month high to last stand at 136.86.

The euro and sterling both made little gains to leave behind their multi-month lows, advancing 0.02% and 0.09%, respectively, to $1.0546 and $1.1854.

The U.S. dollar index, which compares the value of the dollar to a basket of six other currencies, decreased as a result, falling 0.02% to 105.61.

The index, however, held close to a three-month high of 105.88 reached in the previous session after Tuesday’s 1.3% increase, which was its greatest daily gain since last September, was extended.

Powell stated on Tuesday that the Fed will likely need to raise interest rates more than expected and was ready to do so in more significant steps as a result of a spate of positive economic data coming out of the United States in recent weeks that indicated persistent inflationary pressures.

In response to Powell’s remarks, traders rushed to re-price an aggressive pace of interest rate increases. Fed funds futures now indicate a 70% possibility that the Fed will raise rates by 50 basis points this month, up from only 9% a month earlier.

Also anticipated to remain over 5.5% through the end of the year are U.S. rates.

On the other hand, the Bank of Canada was the first significant central bank to halt its monetary tightening campaign on Wednesday, maintaining its benchmark overnight interest rate at 4.50%.

In the wake of the ruling, the Canadian dollar fell to a more than four-month low the previous session, and it was trading at 1.3808 to the US dollar on Thursday.

The Reserve Bank of Australia Governor Philip Lowe indicated on Wednesday that the central bank was closer to pausing on rate hikes and suggested a halt may come as soon as April, which kept the Australian dollar under pressure and caused it to drop 0.06% to $0.6586 in Asia trade.

In other news, the New Zealand dollar increased 0.03% to $0.6107 after plunging to nearly a four-month low the previous day.

Prior to the release of Chinese inflation statistics later on Thursday, the Chinese offshore yuan remained stuck close to the crucial psychological level of 7 per dollar, last trading at 6.9657.

For feedback and suggestions, write to us at editorial@iifl.com

explored-media

Related Tags

  • China
  • Dollar
  • FOREX
  • USA
sidebar mobile

BLOGS AND PERSONAL FINANCE

Read More
Knowledge Center
Logo

Logo IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000

Logo IIFL Capital Services Support WhatsApp Number
+91 9892691696

Download The App Now

appapp
Loading...

Follow us on

facebooktwitterrssyoutubeinstagramlinkedintelegram

2025, IIFL Capital Services Ltd. All Rights Reserved

ATTENTION INVESTORS

RISK DISCLOSURE ON DERIVATIVES

Copyright © IIFL Capital Services Limited (Formerly known as IIFL Securities Ltd). All rights Reserved.

IIFL Capital Services Limited - Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
ARN NO : 47791 (AMFI Registered Mutual Fund Distributor)

ISO certification icon
We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.