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Weekly Roundup: US dollar bolstered by hawkish Fed

currency-newsWeekly Roundup: US dollar bolstered by hawkish Fed
The US dollar got off to a strong start last week, with demand for the safe-haven currency being bolstered by renewed concern over the war in Ukraine and its impact on the global economy.

However, this upside was tempered somewhat by the inversion of the US yield curve and fears this may be a signal the US will slip into a recession by the end of 2023.

Some hawkish Federal Open Market Committee (FOMC) minutes then lent additional support to the ‘greenback’ in mid-week trade as they further bolstered expectations for the next Federal Reserve interest rate hike.

Expectations for a half-percent rate hike in May were reinforced by a series of speeches from Fed policymakers throughout the week, amid a broadly hawkish consensus and calls for the bank to accelerate its tightening cycle, in spite of concerns the bank could tighten too much too fast.

The US dollar was then capped off by further gains in the last half of the week, amidst the prevalence of a risk-off mood in addition to the latest US jobless claims, after they fell to a 50-year low in the last week of March.

The US consumer price index is likely to act as a key catalyst of currency movement this week.

Markets are bracing for another acceleration of US inflation, with the US dollar likely to appreciate as this will no doubt fuel Fed rate hike speculation.

Also impacting the US dollar will be the latest US retail sales reading, will an acceleration of sales growth last month help to push USD exchange rates higher in the second half of the week?
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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