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The super dollar takes flight due to lower interest rate cut bets in March

The super dollar takes flight due to lower interest rate cut bets in March
February 1, 2024 – 12:01

At the same time, operators are facing market concerns regarding US regional lenders.

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The euro is experiencing a sharp depreciation this Thursday, reaching its lowest level in seven weeks, while the dollar it gets stronger. This trend is consolidated after the statements of the president of the Federal Reserve, Jerome Powellwhich lowers expectations of a rate cut in the United States as early as March. At the same time, traders are facing market concerns regarding US regional lenders.

The European currency touched $1.0780, marking its lowest since December 13, and subsequently recorded a 0.2% drop to $1.07975. Simultaneously, sterling lost 0.3% to $1.2649 ahead of the Bank of England’s expected monetary policy decision, scheduled for later in the day.

The dollar index, which measures the performance of the greenback against a basket of six major currencies, including the euro, the yen and the pound, rose 0.06% to 103.68. This index remains near the high of 103.82 reached earlier this week, a level not seen since December 13.

Dollar: encouraged by Jerome Powell

Powell’s statements and US economic data, which indicate a possible wait before cutting rates, They contribute to the momentum of the dollar. Powell reinforces this perception by stating today that a cut in March “is not the base case.” The Federal Reserve chair expresses skepticism about a cut at the March meeting, although he leaves room for uncertainty.

The Fed’s decision to keep rates unchanged, but remove reference to possible further increases in borrowing costs, impacts US Treasury bond yields. This triggers a decrease in yieldssupporting a wave of bonds hit by renewed concern around US regional banks, particularly after New York Community Bancorp’s 37% plunge to its lowest level in more than two decades after posting a surprise loss.

In the US Treasury bond market, the two-year yield experienced a decrease of 13 basis points on Wednesday and remained stable today, Thursday, at 4.23%.

In the field of currencies, the dollar shows a decrease of 0.15% against the yen, standing at 146.7, after hitting its two-week intraday low in the previous day.

In the next notable event, the Bank of England will announce its rate decision at 1200 GMT on Thursday. It is anticipated that there will be no change in rates, and the focus is on how policymakers address the decline in the speed of inflation, as well as in the cautionary signs about the imminence of cuts.

Source: Ambito

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