The US dollar achieved strong gains in the last trading week, driven by a series of strong US economic data, with increasing market expectations that the US Federal Reserve will continue its strong tightening approach during the upcoming bank meetings.
Dollar trades now
Looking at the dollar’s dealings on Friday, we note that the US dollar index, which measures the performance of the US currency against a basket of currencies, rose strongly by about 0.64%, to trade around 104.52 points.
Dollar trading this week
In terms of weekly trading, the US dollar recorded a strong rise in today’s trading, heading towards recording remarkable weekly gains for the third week in a row; As the total dollar gains since the first sessions of the week until now were estimated at approximately 1.00%.
The most important factors affecting the dollar’s bullish movements in today’s trading
- The strength of recent US economic data
The economic data cast a positive shadow on the dollar’s trading today, as the data released yesterday revealed the positivity of the US producer price index data at the end of last January, as the index, which is one of the main indicators for measuring inflation, grew by about 0.7% in January, exceeding market expectations. This enhanced the prospects for the US Federal Reserve to continue the monetary tightening cycle. In other words, raising interest rates; Which reflects positively on the US dollar.
Urgent – US producer price data is positive and better than market expectations!
The US jobless claims data provided more support for the dollar; As the number of US jobless claims increased by 196 thousand new applications this week, which was less than the market expectations; Which supported the bullish momentum of the dollar’s trading; Supported by the strong impact of this data on the US employment market, and then the strength of the dollar at the end.
Urgent – Positive US jobless claims data for this week!
- The hawkish rhetoric of the US Federal Reserve members escalated
The recent statements of some members of the US Federal Reserve in support of raising interest rates at a continuous rate significantly strengthened the dollar’s trading, and in this regard, the US Federal Reserve member Bullard said yesterday evening that inflation is still very high and the bank’s moves will continue to reduce high inflation in the United States, along with increases additional interest rates.
A member of the US Federal Reserve, Mester, agreed in this perception, who stated that bullish inflationary risks still exist; Therefore, the US Federal Reserve’s intention to raise interest rates by 50 basis points at its next meeting seems very logical, and the US Federal Reserve will need to exceed the current interest rate to more than 5% and stay for a while.
Member of the US Federal Reserve: The country’s economy is growing faster!
US Fed member Meester surprised the market with her remarks to raise interest strongly!
These statements contributed to strengthening the movements of the US dollar in today’s trading, due to the growing market expectations regarding the US Federal Reserve continuing its tightening approach by raising interest at a greater pace.
- Expectations of a slowdown in the growth of the US economy have receded
The rise of the US dollar in the last trading sessions of the week is due to the growing positive expectations about the strength of the US economy. Whereas, a member of the US Federal Reserve, Bullard, stated that the country’s economy is growing faster than it was in the second half of 2022, adding that the number of vacancies is still at a high level; In the end, it provided support for the dollar currency during transactions.