Strong U.S. data support the dollar as Fed hawks maintain power

20 Feb 2023 , 09:20 AM

A solid run of economic statistics coming out of the US on Monday helped the dollar gain ground, and traders predict that the Federal Reserve will continue to tighten monetary policy longer than previously anticipated.

Sterling fell 0.12% to $1.2028 and the Australian dollar fell 0.18% to $0.6866 as the US dollar advanced broadly in early Asian trading.

The value of the dollar increased to 134.32 yen, up 0.14%.

Because U.S. markets are closed on Monday in observance of Presidents’ Day, trading is anticipated to be light.

Market expectations have increased that the U.S. central bank has more work to do in taming inflation and that interest rates will need to rise as a result of a slew of data out of the largest economy in the world in recent weeks that point to a still-tight labour market, sticky inflation, strong retail sales growth, and higher monthly producer prices.

The Fed funds rate is now predicted by the markets to reach a peak of just below 5.3% by July.

The U.S. dollar has been supported by Fed officials’ pessimistic remarks, which suggested that higher interest rates will be necessary to properly combat inflation.

The market price for the peak ECB rate increased on Friday after two European Central Bank (ECB) members stated that the euro zone’s interest rates still have some room to rise.

That didn’t do much to help the euro, which was recently down 0.16% at $1.0677.

In other news, the U.S. dollar index increased 0.05% to 104.03 and is now up nearly 2% for the month, on track to post its first monthly gain since late September.

With attention focused on the Reserve Bank of New Zealand’s (RBNZ) interest rate decision on Wednesday, the kiwi fell 0.17% to $0.6232.

With markets generally anticipating that China’s benchmark lending rates will remain constant at the monthly fixing, attention in Asia is on the country’s decision about its loan prime rate on Monday.

The offshore yuan last traded slightly lower against the dollar at 6.8783.

For feedback and suggestions, write to us at [e-mail] solid run of economic statistics coming out of the US on Monday helped the dollar gain ground, and traders predict that the Federal Reserve will continue to tighten monetary policy longer than previously anticipated.

Sterling fell 0.12% to $1.2028 and the Australian dollar fell 0.18% to $0.6866 as the US dollar advanced broadly in early Asian trading.

The value of the dollar increased to 134.32 yen, up 0.14%.

Because U.S. markets are closed on Monday in observance of Presidents’ Day, trading is anticipated to be light.

Market expectations have increased that the U.S. central bank has more work to do in taming inflation and that interest rates will need to rise as a result of a slew of data out of the largest economy in the world in recent weeks that point to a still-tight labour market, sticky inflation, strong retail sales growth, and higher monthly producer prices.

The Fed funds rate is now predicted by the markets to reach a peak of just below 5.3% by July.

The U.S. dollar has been supported by Fed officials’ pessimistic remarks, which suggested that higher interest rates will be necessary to properly combat inflation.

The market price for the peak ECB rate increased on Friday after two European Central Bank (ECB) members stated that the euro zone’s interest rates still have some room to rise.

That didn’t do much to help the euro, which was recently down 0.16% at $1.0677.

In other news, the U.S. dollar index increased 0.05% to 104.03 and is now up nearly 2% for the month, on track to post its first monthly gain since late September.

With attention focused on the Reserve Bank of New Zealand’s (RBNZ) interest rate decision on Wednesday, the kiwi fell 0.17% to $0.6232.

With markets generally anticipating that China’s benchmark lending rates will remain constant at the monthly fixing, attention in Asia is on the country’s decision about its loan prime rate on Monday.

The offshore yuan last traded slightly lower against the dollar at 6.8783.

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