The US Dollar Index (DXY) – which tracks the buck vs. its main rivals – has extended its upside momentum further north of the key 101.00 barrier following the hawkish message by Chairwoman Janet Yellen at her semi annual Humphrey Hawkins Testimony on Tuesday.
Yellen suggested it would be ‘unwise’ to wait too long to hike rates, advocating at the same time for a gradual pace of rate hikes. Her comments were supported further by Richmond Fed J.Lacker, who slipped the chance that the Fed may need to raise rates more than the initially projected three times this year.
USD remains well underpinned by the performance of yields in the US money markets, where the 10-year benchmark briefly tested the key 2.50% area yesterday, extending the rebound from last week’s troughs around 2.32%.
According to CME Group’s FedWatch tool, the probability of a rate hike at the March meeting has climbed to nearly 18% from just above 13%, although it could keep climbing in case today’s key releases in the US docket add to the already healthy US fundamentals. Yellen’s second testimony today is not expected to steer away from the recent tone, leaving scarce room for surprises.
In the meantime, the long-term underlying bullish stance on DXY remains well supported by the divergence in monetary policy between the Federal Reserve and its peers. In the shorter run, however, US politics should add more volatility around the buck as uncertainties around the potential economic measures by the Trump’s administration remain high.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD hovers around 0.6500 amid light trading, ahead of US GDP
AUD/USD is trading close to 0.6500 in Asian trading on Thursday, lacking a clear directional impetus amid an Anzac Day holiday in Australia. Meanwhile, traders stay cautious due ti risk-aversion and ahead of the key US Q1 GDP release.
USD/JPY finds its highest bids since 1990, near 155.50
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, testing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming Japanese intervention risks. Focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold price lacks firm intraday direction, holds steady above $2,300 ahead of US data
Gold price remains confined in a narrow band for the second straight day on Thursday. Reduced Fed rate cut bets and a positive risk tone cap the upside for the commodity. Traders now await key US macro data before positioning for the near-term trajectory.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price. Coupled with broader market gloom, INJ token’s doomed days may not be over yet.
Meta Platforms Earnings: META sinks 10% on lower Q2 revenue guidance Premium
This must be "opposites" week. While Doppelganger Tesla rode horrible misses on Tuesday to a double-digit rally, Meta Platforms produced impressive beats above Wall Street consensus after the close on Wednesday, only to watch the share price collapse by nearly 10%.