US Dollar Movement This Week
The US dollar continues to weaken against our Fiji dollar basket from last week. The US shares and the greenback both fell after the US Federal Reserve raised official interest rates by 25 basis points and pushed back against the chance of rate cuts this year.
The financial markets still believe the US Fed will need to cut rates this year, with bond market pricing looking for almost 70 basis points of cuts by the end of 2023.
The Fed’s decision to hike rates was contested by some observers with worries about the US banking system remaining a major concern in some parts of the market. Meanwhile, April’s job data was nowhere sad.
The US economy added 253,000 new nonfarm jobs in April, beating expectations for the 13th straight month.
The unemployment rate unexpectedly fell to 3.4 per cent, a multidecade low, and wages grew 0.5 per cent monthly and 4.4 per cent on a yearly basis.
Both, higher than expected.
The strong jobs data reversed expectation of a Federal Reserve rate cut in July.
There are two more CPI reports and one more jobs data to go before the US Fed’s next decision.
The expectation was that the US core inflation may have eased from 5.6 per cent to 5.5 per cent in April.
However, April inflation cooled to 4.9 per cent, the smallest year-overyear increase in two years.
The so-called core inflation remained sticky at 5.5 per cent, suggesting interest rates may need to stay high for some time to tame it.
The US dollar remains under decent selling pressure.
The debt ceiling and the ongoing stress in US regional banks help keep the Fed doves in charge of the market despite economic data calling for a tight hand from the Fed.
Conclusively this Week’s major Economic Data Announcements were.
The Australian Budget Release.
US CPI (April)
China CPI (April)
Bank of England
Rate Decision
US Initial Jobless Claims UK GDP (Q1)
Interest
The chart below is a graph depicting how the USD performed over April to this week. Mainly with a high of 0.4513 and a low of 0.4341 which will continue to help imports or repayment of USD loans.
Key drivers will be economic data out of USA and China. Followed by key commodities like gold, silver, and oil as key macro indicators.