Dollar Hits in European trade on Thursday, demonstrated strength against a basket of major currencies, marking its third consecutive session of gains and reaching a six-week high. This surge was fueled by bullish remarks from Federal Reserve member Christopher Waller
which tempered expectations of an interest rate cut in June.
The Dollar Index
The dollar index climbed by 0.4% to reach 104.33, briefly touching a session low of 104.30. This uptick follows a 0.1% increase on Wednesday, underscoring the resilience of the US economy amidst ongoing uncertainties.
Waller’s Statements
Christopher Waller’s comments on Wednesday emphasized a cautious approach towards interest rate adjustments
stating that there is no immediate need for rate cuts. He expressed a desire to observe sustained low inflation for at least two months before considering any changes to monetary policy. Waller’s remarks led to a revision in market expectations
with the likelihood of a 0.25% interest rate cut in June dropping from 72% to 60%.
US Interest Rates
Investors are now anticipating a total of 75 basis points in interest rate cuts by the Federal Reserve throughout the year
reflecting a recalibration of expectations in response to Waller’s comments.
US Growth Data
Market focus now turns to a series of crucial US economic indicators scheduled for release later in the day. GDP growth for the final quarter of 2023 is anticipated to come in at 3.2%
down from the robust 4.9% recorded in the preceding quarter. Additionally unemployment claims expected to show a slight increase to 212 thousand for the week ending March 23
compared to 210 thousand previously. Pending home sales data for February forecasted to rebound by 1.4% following a 4.9% decline in January.
Conclusion
The US dollar’s ascent to a six-week high underscores the impact of Waller’s comments on market sentiment and expectations regarding US monetary policy. As investors await key US economic data, including GDP growth figures, unemployment claims, and pending home sales
the Dollar Hits performance in the near term will likely hinge on the outcome of these indicators.