He super dollar fell slightly after hitting highs for several months this Wednesday, March 8, as investors adjusted to the prospect of higher interest rates after the Federal Reserve Chairman, Jerome Powellsurprised the markets on the eve with a more aggressive outlook.
The dollar index closed stable at 105.63 units, after having reached 105.88 units, its highest level since December 1. The index improved from a nine-month low of 100.80 hit on February 1, but remains well below the 20-year high of 114.78 hit on September 28.
Jerome Powell reaffirmed his message of higher and potentially faster interest rate hikesbut stressed that the debate is still open and that the decision will depend on the data that is published before the next monetary policy meeting of the central bank, which will be held in two weeks.
“I don’t think Powell told us anything we didn’t already know. I think it just shows the sensitivity of the market and the uncertainty about where the top federal funds rate is going to be.”said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.
Investors now await Friday’s release of February jobs data, looking for confirmation that continued strong job growth supports further rate hikes. The dollar has skyrocketed since it was reported on February 3 that employers added 517,000 jobs in January.
“The dollar has been in a big drop for four months and I think for now it’s still corrective in nature, meaning I don’t think we’ll go back to the September and October highs,” Chandler said.
The ADP national employment report released on Wednesday showed that private employment increased by 242,000 jobs last month.
The euro was trading almost unchanged at $1.0547. It previously fell back to $1.0524, just above this year’s low of $1.04820 hit on Jan. 6. The dollar rose 0.09% to 137.28 yen after touching 137.90, its highest since December 15.
The British pound gained 0.09% to $1.1840, then fell to $1.18105, its lowest since Nov. 21.
Source: Ambito
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