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Weekly roundup: US dollar dented by dovish Fed comments

currency-newsWeekly roundup: US dollar dented by dovish Fed comments
The US dollar got off to a poor start last week, with the currency initially falling in tandem with US Treasury yields.

This downturn in US yields was triggered by a series of dovish speeches from Federal Reserve policymakers at the start of the week.

Perhaps in an effort to quell market expectations following some notably hawkish comments from Fed Chair Jerome Powell the week prior, the policymakers appeared to play down the chances of a hike of 50bps at the Fed next policy meeting in March.

This downside in the US dollar was reinforced through the first half of the week by a prevailing risk-on mood as well as an underwhelming ISM manufacturing PMI.

January’s ADP employment figures further limited the appeal of the US dollar after reporting a dramatic contraction in US employment growth at the start of the week.

The US dollar then remained under pressure through into the latter half of the week as the ISM non-manufacturing PMI reported activity in the US service sector fell to an 11-month low in January.

However, the US dollar was able to stage a recovery at the very end of the week, with the currency riding higher on the back of a surprisingly positive US non-farm payroll print.

In the spotlight this week will be the publication of the latest US consumer price index. January’s CPI figures could bolster Fed rate hike bets amidst expectations they will report US inflation continued to accelerate.

Alongside a positive consumer sentiment index reading, this could help the US dollar to rally this 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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