Dollar Price Has Eased As Central Banks Are Currently The Center Of Attention For TradersJanuary 28, 2023
The dollar recorded a slip in value in the Wednesday trading session against the euro. Despite the slip, the losses of the US dollar were capped and they were not fully out of control.
This happened because the traders were hesitant about making any moves or bets. The investors hesitated in making many investments in the US dollar and similarly, they did not sell it that much.
They are currently waiting for the central banks to hold their meetings in the upcoming week.
The traders are also looking at the European Central Banks as well as the US Federal Reserve to come up with their meeting minutes.
On the other hand, the major currencies from the Asian market have not recorded significant movements in the recent trading session. This is because the Lunar New Year holidays are being observed in Asia.
The compression in the trading prices of the currencies is being recorded across the board. The compression is because of the central bank meetings that are eagerly awaited by the traders.
They will not be making any decisions about making huge investments or withdrawals in the major currencies until the central financial entities hold their meetings in the upcoming week.
Even Corpay’s chief market strategies, Karl Schamotta has shared a similar speculation about the trading prices of the major currencies.
Expectations from the Feds and the ECB
In the upcoming week, traders are expecting that the US Feds would introduce a rise in interest rates. Many expected that the US Feds would not hike the interest rates in the upcoming month.
Now, it is being speculated that the US Feds may increase the interest rates by 25 bps. Although the Feds may not cease to implement interest rate hikes it may tone it down from 50 bps to 25 bps.
It was in December when the Feds announced that a 50 bps interest rate increase would be introduced in the month of January 2023.
On the other hand, the European Central Bank (ECB) has hinted that they may continue with the interest rate hikes at the same rate as the previous ones.
The ECB is highly likely to keep increasing the interest rates at the same rate as they have done before. They may increase the interest rates by 50 bps in the upcoming week.
It seems that the traders have gotten used to looking at updates and data from the US markets.
Unfortunately, no promising data came out on Wednesday, which resulted in trading sessions that were very sluggish.
Not much of a movement was recorded in the foreign exchange market, especially, in the western forex markets.
There might be a positive side for the US economy that may help push the trading price of the USD in the upcoming week.
Investors are looking up to the gross domestic product estimates for the fourth quarter that are to be released by the US Commerce Department next week.
If the data is favorable for the US market and economy, it would definitely help increase the trading price of the dollar in the market.
However, there is also a possibility of the data not coming up to expectations. If the data is not promising, it may trigger a selling spree for the USD, causing a pull in its trading price.
USD Performance against Basket Currencies
The trading price of the euro has recorded a 0.23% surge against the dollar, being pushed up to $1.0913. Due to the recent surge, the value of the euro has been pushed closer to $1.0927 (a nine-month high), which it hit on Monday.
The value of the dollar has recorded a 0.42% decline against the trading price of the yen. Following the dip, the yen is now trading at 129.615 versus the dollar.
It is almost an eight-month low that the trading price of the dollar has hit against the yen.
The Australian dollar appreciated by 0.76% against the US dollar while the New Zealand dollar depreciated by 0.44%.
The sterling has surged 0.47% against the dollar while the dollar has surged by 0.18% against the Canadian dollar.