Dollar Mixed After Powell Says FOMC Open to Larger Rate Hikes

Dollar Mixed After Powell Says FOMC Open to Larger Rate Hikes

The US dollar was mixed against its major trading partners early Tuesday after Federal Reserve Chairman Jerome Powell said that the Federal Open Market Committee would act as needed to control inflation, even if that meant 50-basis-point increases in the federal funds rate at one or more meetings or moving the rate above the long-term neutral rate for a time.

Tuesday’s data schedule is light again, with the Philadelphia Fed nonmanufacturing reading, the Richmond Fed’s report on manufacturing and services and the weekly Redbook retail sales data the only releases scheduled.

The week’s data highlights include new home sales for February on Wednesday, weekly jobless claims on Thursday and the revised Michigan Sentiment index for March on Friday. READ: U.S Fed Hikes Interest Rates 0.25%

A quick summary of foreign exchange activity heading into Tuesday shows that EUR-USD fell to 1.0999 from 1.1017 at the Monday US close and 1.1028 at the same point a day earlier. There are no EU data releases scheduled for Tuesday.

European Central Bank President Christine Lagarde speaks in the morning. On Monday, Lagarde said that the ECB and the Federal Reserve will be tightening policy at different speeds due to the US economy advancing faster but noted that she does not see a chance of stagflation in Europe despite the situation in Ukraine.

GBP-USD rose to 1.3215 from 1.3168 at the Monday US close and from 1.3129 a day earlier. Industrial trends orders in the UK surged in March, matching a record level last seen in November 2021.

After a 25-bp rate increase last week, the Bank of England is seen raising rates further at its May meeting, though uncertainty from situation in Ukraine clouds that projection.

USD-CAD fell slightly to 1.2589 from 1.2592 at Monday US close and from 1.2612 a day earlier. Canadian data on industrial product prices will be released later today.  

High inflation is expected to encourage the Bank of Canada to further tighten monetary policy at its next meeting in April. USD-JPY surged to 120.8506 from 119.4728 at the Monday US close and from 119.2103 a day earlier.

The Japanese leading index declined in January, data released overnight showed, suggesting slower future economic activity. The Bank of Japan kept its policy rate unchanged last week despite rising inflationary pressures. #Dollar Mixed After Powell Says FOMC Open to Larger Rate Hikes

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