Dollar rises on Fed comments, economic data

by Jonathan Adams
economic data

The dollar firmed against the euro, yen, Swiss franc, and commodity currencies like the Australian and New Zealand dollars

The U.S. dollar gained on Tuesday, boosted by hawkish comments from Fed officials as well as data showing a stable housing market in the U.S. economy, both indicating that the central bank will not be in a hurry to begin its rate-cutting cycle.

The dollar firmed against the euro, yen, Swiss franc, and commodity currencies like the Australian and New Zealand dollars.

Federal Reserve Governor Michelle Bowman repeated her view on Tuesday that holding the policy rate steady “for some time” will likely be enough to bring inflation under control. She also reiterated her willingness to raise borrowing costs if needed.

Fed Governor Lisa Cook, for her part, said it would be appropriate to reduce interest rates “at some point” given significant progress on inflation and a gradual cooling of the labour market. She remained vague, however, about the timing of the rate cuts.

If you listen to the Fed speakers, they are very shy of making too much of the one weak report that we have had given that on the aggregate we still had stronger reports since the beginning of the year, according to Jayati Bharadwaj, global FX strategist, at TD Securities in New York.

She added: They sound very non-committal and also very data-dependent, given the uncertainty around the inflation outlook that is higher in the U.S. than elsewhere around the world.

U.S. data was mixed on Tuesday, still allowing the dollar to hold its gains.

A report showed U.S. single-family home prices rose at a steady pace in April, increasing 0.2% on the month after being unchanged in March. In the 12 months through April house prices rose 6.3% after gaining 6.7% in March. That pushed the dollar a little higher.

U.S. consumer confidence, however, slightly declined in June, with the index at 100.4 from a downwardly revised 101.3 in May, as per the Conference Board. The June number, however, was slightly higher than the market forecast of 100. The report did not really hurt the dollar.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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