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The USD seems to be getting healthy from the impacts of the ongoing war in Ukraine. The greenback got back in line after a slight setback as per the reports. The US inflation, which was expected to bring the currency down, ended up softer. The Feds are confident that the currency will continue this momentum in the days to come. Unfortunately, the Euro still is hitting bottom as the war has been happening uninterrupted for two months now.
In an interview with the Wall Street Journal, Lael Brainard, the Governor of the Federal Reserve of the USA, answered questions regarding the USD’s current state in the market. She has emphasized what she believes to be “the cooling signs” in the latest US inflation data. However, the Feds will continue to proceed with the series of rate hikes as planned. However, they are looking for any further operations before increasing the interest rates.
The hike in gasoline prices brought the US Consumer Price Index to an 8.5% in March. However, this was later brought to moderation as the price of old cars and trucks balanced. As a result, the core CPI settled at 6.5%, which is not close to the estimated values. Brainard also added that the Feds would not be “pivoting at this point.” Bipan Rai, FX Strategy Head at CIBC Capital Markets Toronto, considers this statement an assurance on the greenback. Traders should read more about options for the best forex brokers before getting started in the FX market.
Rai confirms that the USD is stabilizing in the market. Despite having only little resistance, this will not be a significant climb thanks to the tightening policies from the Feds. The dollar index already posted a rise of 26 basis points on Tuesday. The 10-year Treasury yields inched down to 2.727% from the Monday value of 2.793%. Surprisingly, it is the highest value of the treasury yields since 2019. Some also believe that the Feds will not be as aggressive as the investors expected, given the recent numbers.
The Euro keeps to the downside amidst the highly anticipated meeting of the European Central Bank. Given the current pricing in the money market, investors expect an interest rate hike of up to 70 basis points. Yet, some believe the window for making amendments to the ECB policies is shrinking quickly, and approaches have become more hawkish. On the other hand, the ongoing war is expected to push food prices and oil, as Russia and Ukraine are the largest exporters of Wheat and Sunflower oil. The price rise may drastically impact the European economy in the coming weeks.
