Table of Contents
Introduction
U.S. Dollar: The U.S. Dollar has made a comeback against the euro, rebounding from an almost 8-week low, as market expectations grow that the Federal Reserve is done raising interest rates. This week, all eyes are on Federal Reserve officials for further signals on the central bank’s rate policy.
Fed Chairman’s Upcoming Speech on U.S. Dollar
Fed Chairman Jerome Powell is scheduled to speak on Wednesday and Thursday. Investors are closely watching whether he maintains the dovish tone he adopted after the recent Fed meeting.
Diverging Views Among Fed Officials:
Analysts anticipate a growing division within the Federal Open Market Committee (FOMC) between the doves and the hawks, despite a unanimous statement last week. The varying views of other Fed officials will be analyzed for hints about future rate increases.
Inflation Target and Weaker Jobs Growth:
Fed Gov. Lisa Cook expressed hope that the current target interest rate would bring inflation back to the Fed’s 2% goal. Weaker-than-expected job growth in October has raised concerns about a slowing U.S. economy, which could lead to the Fed maintaining steady interest rates.
Market Focus on Upcoming CPI Data:
The next significant market driver is expected to be the consumer price inflation (CPI) data for October, set to be released next week. Analysts believe this will be a key determinant for future Fed rate hikes.
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Dollar’s Recovery:
The dollar index has rebounded, currently up 0.13% at 105.19 after hitting its weakest point since September 20 at 104.84. The dollar experienced its largest weekly decline since July last week, dropping 1.4%.
Euro’s Performance:
The euro has dipped slightly to $1.0723 after reaching its highest level since September 13 at $1.0756. Economic weakness in the eurozone compared to the U.S. might limit further gains for the euro.
Eurozone Economic Concerns:
A survey shows that the downturn in eurozone business activity accelerated last month, indicating a growing risk of a recession in the 20-country currency union.
Japanese Yen:
The dollar has risen against the Japanese yen, currently up 0.41% at 149.98. Japanese authorities may consider intervention or currency discussions if the yen reaches around 155 per dollar, as it did last week.
Australian Dollar:
The Australian dollar has fallen to $0.6491 after reaching a three-month high of $.6523. The Reserve Bank of Australia is expected to raise its key policy rate by 25 basis points to 4.35% on Tuesday following four consecutive meetings with unchanged borrowing costs.
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