Powell’s Statement And Employment Report Takes Center Stage While Dollar Slips

Powell’s Statement And Employment Report Takes Center Stage While Dollar Slips

March 7, 2023 0 By Wiley McDermott

This has been the first time that in the past four weeks, the price of U.S. dollar finally slips. After Powell’s testimony and positive employment figures, the U.S. Dollar finally saw some downward momentum.

On the other hand, the weak dollar also eased the pressure on the commodities market.

Following the Fed Chair’s testimony, the price of the Greenback finally plummeted as the basket of the world’s six strongest currencies. The new week did not bring positive news for the dollar investors.

Now the most important macroeconomic factor is the upcoming Fed meeting and their decision about how much the interest rate will increase.

For dollar lovers, a high-interest rate will be the ideal situation as it would send the price of the dollar in an upward direction.

On the other side, the ongoing testimony of Feds Chair Jerome Powell will further shape the price of the dollar in the upcoming days. As USD dropped its momentum, the gold gained momentum, as a result, its price surged by 3%.

The Current Picture of the Dollar Index

A look at the USD index shows, that currently the dollar is at its nine-month low and exchanging hands at 100.80.

Conversely, robust data and persistent inflation push investors to cope with the prolonged high-interest rates. It seems that the Feds have no other option but to increase the interest rate for a longer period.

Moreover, by the end of today, the U.S. dollar index shows a 0.26% decrease and closes at 104.35 for the day. Today’s data that is being shared this week clearly shows that there are many things beyond suspicion.

As The Things, Stand Feds Are Also Confused

The current market indicators show that even Fed as an institution is incorrectly assessing the labor market numbers. But one thing is certain, inflation fears are still present.

It is expected that through the detail of the employment, numbers will be positive, but it would be not as encouraging compared with January’s employment report.

Now, the upcoming testimony of the Fed’s chair is of significant interest. The reason being analysts are closely monitoring for any fresh indications on whether the Federal Reserve might increase the pace of interest rate hikes.

It is an interesting fact that last year Feds spiked the interest rates upward. The gigantic increase in the interest rates gave the U.S. dollar much-needed momentum.

It has also been argued that Feds might spike the interest rate up by 0.50 basis points, taking it to a 0.75 basis level.

According to the traders in the Fed funds futures market, there is a 76% chance that the Federal Reserve will increase interest rates by 25 basis points.

Now, all eyes are on the Feds’ March 21-22 meeting. On the other hand, some other big currencies finally gained momentum in their price.

The Euro was finally up by 0.35%, by the end of today against the USD. On the other hand sterling and USD, were down against Euro.

Talking of the Japanese Yen, the price of JPY finally increased by 0.06% and reached the level of around 135.88. This gain came after Japan’s Feds meeting.

On the flip side, the price of the Chinese Yuan has seen a decline in its price by 5%. This was due to the lower-than-expected economic growth.

Moreover, the Australian dollar saw a decline in its price by 0.46%. The new price of AUD as of now is $0.6737.

But, experts are predicting that soon the currency market will see a strong bullish breakout. As the result, the microeconomic outcomes will become irrelevant.

Moreover, the upcoming increase in the interest rate will once more give the momentum to USD. Experts have also advised that U.S. dollar investors should not worry about the slight decline in the price of the dollar.

The future of USD in terms of price seems very encouraging. Soon the greenback will regain its momentum.