Ekonomické zprávy

Asian session review: the US dollar is showing positive dynamics

TimeCountryEventPeriodPrevious valueForecastActual
05:00JapanCoincident IndexJanuary99.1 96.1
05:00JapanLeading Economic Index January96.996.996.5
07:00GermanyRetail sales, real adjusted January-5.3%2%-0.3%
07:00GermanyRetail sales, real unadjusted, y/yJanuary-6.4%-6.1%-6.9%
07:00GermanyIndustrial Production s.a. (MoM)January-2.4%1.4%3.5%

During today's Asian trading, the US dollar rose slightly against major currencies, continuing yesterday's rally, driven by hawkish statements by Fed Chairman Powell.

The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.07% to 105.69, reaching the highest level since December 1. Yesterday, the index rose by 1.27%.

Yesterday, Jerome Powell signaled that the peak value of interest rates may be higher than expected. “The latest economic data was stronger than expected, which suggests that the terminal level of the federal funds rate is likely to be higher than previously expected,” the head of the Fed told the Senate Banking Committee.

“If the totality of incoming data indicates the need for faster tightening, we are ready to increase the pace of rate hikes,” he added.

Powell's statements prompted markets to reconsider their short-term interest rate expectations. According to the CME FedWatch Tool, they see a 71.2% probability of raising interest rates by 50 basis points at the March Fed meeting. A day earlier, the probability of such an action was estimated at only 27.7%. In addition, markets now expect Fed rates to be raised by 100 basis points over the next four meetings, to a peak of about 5.6% versus 5.4% predicted before Powell's speech.

Today, Powell will address the House Financial Services Committee with a speech that is expected to be a repeat of his statements in the Senate yesterday.

After Powell's speech, investors will turn their attention to another important event - the publication of the US labor market report for February (on Friday). Economists predict that the economy added 203,000 new jobs last month, while the unemployment rate remained at 3.4%, and the average hourly wage increased by 0.3% mom and 4.7% YoY.

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