Weekly Roundup: US dollar soars amid rising Fed rate hike bets
Amy Richards February 27th 2023 - < 1 minute read
After a slow start as US markets closed for the Presidents’ Day federal holiday, the US dollar went from strength to strength last week.
Demand for the safe-haven currency was initially underpinned by concerns over the war in Ukraine in addition to US-Chinese tensions.
These gains then accelerated in the middle of the week with the publication of the minutes from the Federal Reserve’s February policy meeting. The minutes proved more hawkish than expected, with policymakers unanimously supporting more interest rate hikes.
The US dollar then closed the week on a high following the publication of the latest core PCE price index. A surprise rise in the Fed’s preferred inflation indicator indicated inflation may be sticker than previously thought.
This turbocharged Fed rate hike bets and propelled USD exchange rates to a new multi-week high.
Turning to this week’s session, the US dollar looks well positioned to extend these gains, assuming a risk-off mood continues to prevail.
The US dollar may also be supported by the publication of the latest ISM PMIs if they point to robust US private sector growth in February.
Written by
Amy Richards