US Dollar Remains Firm amid Solid Mood on Economic Recovery

The US dollar held firmly during the early trading session today, Monday, June 28. The greenback’s index against six other major currencies appeared steady at 91.793.

This measure had recovered from the low of 91.524 hit recorded last Friday in the inflation readings’ wake. The Fed funds rates futures for December 2022 are nearly fully pricing in a 0.25-percentage point rate hike by next year’s end.

We find this latest foreign exchange news important for our readers. We believe it will guide them in their trading activities this week.

Based on the report posted online by financial markets and business news outlet CNBC, the US dollar was off to a firm beginning this week amid a solid general mood surrounding an ongoing economic recovery.

This event comes as Republican Senate negotiators on an infrastructure agreement felt optimistic about a US$1.2-trillion bipartisan bill. Their upbeat mood happens following US President Joe Biden’s withdrawal of his threat to veto the measure unless a separate Democratic spending agenda also passes Congress.

The US dollar’s current status also takes place after slightly softer-than-expected American inflation did not do much to chip away investors’ conviction that the US Federal Reserve System could tighten monetary policy if consumer price pressures carry on intensifying. The US dollar consolidated at 110.80 yen.

This figure is not far from last Wednesday’s 15-month high of 110.105 yen. As for the euro, it was a little modified at US$1.19385. The euro grappled with recovering the US$1.20-level.

The US personal consumption expenditures or PCE price index increased 0.5 percent. It does not include the volatile food and energy parts. Additionally, the PCE price index’s latest status comes after advancing 0.7 percent in April.

Meanwhile, the core PCE price index shot up 3.4 percent in the 12 months through May 2021. The US Federal Reserve System’s favorite inflation gauge demonstrated this largest gain since April 1992.

A tight labor market’s signs kept plenty of investors fretting over salary-driven price pressures, though inflation is anticipated to decelerate towards the end of this year. Plus, one key concentration this week is Friday’s payroll data.

It is one of the rafts of economic indicators due this week. Economists anticipate a surge of 675,000 nonfarm payrolls. Yukio Ishizuki remarked that the market could begin pricing in more chances of a rate hike in 2022.

Daiwa Securities’ senior currency strategist added that this scenario depends on the payroll data’s result. We believe that the US dollar leaves forex traders in a wait-and-see position at this point.

Since the week is merely starting, we recommend traders assess the current happenings and what will transpire in the coming days. If they find the situation favorable for them, we believe they can carry on with their trading activities and stay observant.

Otherwise, we recommend our trader readers to hold on to their US dollars or other currencies and wait until they find the situation right for them to trade.

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