Forex Today: US Dollar buyers not willing to give up

Valeria Bednarik FXStreet

What you need to take care of on Wednesday, February 8:

The US Dollar ended the day mixed across the FX board. The American currency extended its February rally throughout the first half of the day, but shed ground unevenly in the last trading session, as US Federal Reserve Chairman Jerome Powell participated in a moderated discussion at the Economic Club of Washington DC.

Federal Reserve Chair Jerome Powell started repeating his hawkish message, stating they would probably need to do further interest-rate increases adding that the process is going to be “bumpy.” The market welcomed the concept delivered by Powell that stronger than anticipated data will see the Fed raising rates accordingly. The US Dollar fell as Wall Street soared as an immediate reaction. Nevertheless, he then added that strong labor market report, or higher inflation reports will result in the Fed raising rates by more than what is currently priced in.

The USD recovered as stocks collapsed to fresh daily lows, but then again changed course and finished the day with substantial gains.

The Euro was the weakest USD rival, with the pair ending the day at around 1.0710. European Central Bank (ECB) policymaker Joachim Nagel said that ECB rate cuts are not on the agenda in the foreseeable future and noted that the central bank’s rates are not yet restrictive. He added that “more significant” hikes are needed. Additionally, Isabel Schnabel Member of the Executive Board of the ECB, said that she intends to raise rates by 50 bps in March.

GBP/USD battled to retain the 1.2000 mark, after falling to a fresh multi-week low of 1.1960.

The AUD/USD pair settled at around 0.6940, helped by the Reserve Bank of Australia. The RBA delivered a hawkish message while raising rates by 25 bps. Substantial gains in Wall Street provided additional support.

USD/CAD trades around 1.3410. Bank of Canada Governor Tiff Macklem said on Tuesday that no further rate hikes will be needed if, as expected, the economy stalls and inflation comes down.

USD/JPY finally closed the weekly opening gap, currently trading at 131.20.

Spot gold was unable to attract investors and consolidate in the $1,860/70 price zone.

Crude oil prices benefited from Wall Street’s rally, with WTI ending the day at $77.30 a barrel.

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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