Dollar Records Modest Gains As Strong Economic Data Offers A Strong PushFebruary 25, 2023
The dollar has been making a significant move in the forex market lately, as it has gained strong bullish momentum.
The trading prices of other major currencies were no match for the US dollar in the Thursday trading session.
Strong Economic Data
The reason behind the push is that the Feds have strong confidence in the price movement of the dollar. Given the developments in recent weeks, the traders knew that the economic data was going to be stronger than expected.
In such a case, the US Feds will have no choice but to keep their monetary policy intact. This is exactly what has happened as the trading price of the dollar has kept on surging following the release of the economic data.
Another major reason why the dollar price surged is that the traders had strong confidence in the meeting minutes shared by the Feds.
Even before the Feds had released the meeting minutes, the traders knew that the decision would be to keep the interest rates intact.
With the minutes finally coming out, the confidence level of the investors increased in favoring the dollar. Since the release of the data, traders have continued supporting the US dollar.
They will continue exerting stronger buying pressure in order to push the dollar’s price higher than where it is at present.
The Feds recently communicated with the traders and the public that the inflation rates they are facing are enormous. These are the higher inflation rates they have witnessed in several decades.
Therefore, it is important that they continue fighting the inflation rates with the current policy. It will help them push the trading price of the dollar higher and make things right.
The majority of Policymakers were Left Astonished
Prior to the release of the economic data, most economists and analysts had different predictions about interest rate hikes.
They were hoping to see a decline and more flexibility in the monetary policy from the Feds. Only a handful of policymakers supported the continuation of the interest rate hikes.
Turns out, the predictions made by the few were on the mark. The sentiments of the investors grew even more and they started to invest heavily in the dollar.
The price movement of the dollar may be modest for now but it may shoot up in the upcoming sessions.
The latest economic data has shown that the despite the inflation rates going up, the unemployment benefits claims are shrinking.
It was expected that with the inflation rates rising, the unemployment claims would rise significantly. However, something completely opposite was witnessed, which triggered the Feds to keep their monetary policy intact.
According to economic history, with the rise in the inflation rates comes a rise in unemployment claims. More companies have to cut down costs, which results in a high number of layoffs.
Despite the recent developments, the US economy has remained unexpectedly resilient. The labor market is now proving its resilience and this has given a cushion to the US Feds to not lose their confidence.
Movement of Dollar Price after the Latest Session
As the trading session took place, the trading price of the euro lowered by 0.09% against the dollar. It remained near the $1.0597 mark against the dollar.
Then it was the sterling that recorded a 0.22% ease against the dollar, moving down to $1.2017.
The US dollar index has also moved up a notch against its six major peers. The latest report shows that the value of the dollar has been pushed up by 0.06% against the dollar.
Due to the recent push, the dollar has edged up to 104.78, which is higher than what the dollar had achieved in the previous sessions. Prior to the recent peak level, the dollar’s value was at 104.57.