The U.S. Dollar improved dramatically and is rallying this morning after the Federal Reserve meeting exuded confidence about the future of the American economy.
Overview
Chairman Jerome Powell brought back pandemic recovery memories as he referred to inflationary pressures as “transitory.” Markets in general took the decision to hold interest rates in good stride as there is also belief that the Fed will return to a path of looser policy if data demands it. Treasury yield for 10-year treasury notes have gone down as a result while equities are looking to have another session in green territory.
The Buck is making a comeback after losing 2.2% of its value thus far this month per the Bloomberg Dollar Spot Index. Confusion over tariffs and their random implementation are still keeping us from having clear guidance, but there are some silver linings in geopolitical developments. The White House has been on phone calls with Russia’s President Vladimir Putin and Ukraine’s President Volodymyr Zelensky in recent days hoping to get commitments to a ceasefire. We shall see if progress on those fronts causes losses to return for the dollar. Without any data tomorrow, we will be watching for headlines digesting the overall take on the economy post-Fed and other central banks’ meetings.
What to Watch This Week…
- Monex USA Online is always open
The complete Economic Calendar can be found here.
GBP ⇓
Sterling is falling after having reached its best point since November following the Bank of England’s meeting earlier. Although there was no consensus because of one vote to cut, BOE officials chose to stay put and keep their benchmark borrowing rate at 4.5%. The decline at the moment is mostly due to commentary from BOE Governor Andrew Bailey who explained that their mentality is still set on lowering costs and easing the financial environment but also addressed turbulence in trade and tensions as reasons for being cautious.
AUD ⇓
The Antipodean currencies of “Aussie” and “Kiwi” are certainly the worst performing pairs against the American Dollar following very poor data, particularly in Australia. The drops of over 1.0% came as the result of shockingly bad employment numbers, revealing a contraction in jobs of (-52K) instead of the expected 30.0K that were supposed to be added. Furthermore, New Zealand remains in trouble with economic stagnation as the yearly average of Gross Domestic Product is at (-1.1%) after a Q4 that saw just a small spike in growth. China’s efforts to make up for the global disturbance may ease the pain for these currency pairs, but their own domestic problems holding back progress.
