Fed: Powell's hawkish message should continue to support a strong US dollar – MUFG
|The US dollar has remained relatively stable over the past week with the US Dollar Index (DXY) continuing to trade close to year-to-date highs at just below the 110.00 level. Fed’s hawkish inflation message continues to favour a strong USD, economists at MUFG Bank report.
Fed strikes hawkish tone
“While the pace of tightening is likely to slow as the Fed continues to tighten policy, Fed Chair Powell emphasized that restoring price stability will require restrictive policy for some time. Lessons from the 1970’s and 1980’’s highlighted that central banks can and should take responsibility for delivering low and stable inflation.”
“Another important lesson was for central banks to keep at it until the job is done. The need to maintain tighter policy for some time pushes back further against market expectations for a dovish pivot from the Fed in the year ahead. The US rate market has been scaling back expectations for rate cuts from the Fed as early as next year.”
“Overall, the hawkish message from Fed Chair Powell should continue to support a strong US dollar.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.