- The US dollar index jumps above 107.00 after the more hot inflation component in GDP data.
- The CME Fedwatch now shows an almost 35 % probability that the prices will remain fixed in June, as the discounts on the table continue.
- The focus will be turned into labor market data from February to be released at the beginning of March.
The US dollar index (DXY), which tracks the performance of the US dollar (USD) against six main currencies, extends on Thursday, as it exceeds 107.00, where the markets digest the second reading of the GDP of the United States (the United States) and its inflation. Traders have been neglected through the most hot personal consumption expenses (PCE), which enhances concerns about continuous inflation.
Daily Digest Market Movers: US dollar gatherings after the surprises of GDP
- The US GDP for the fourth quarter of 2024 came as expected by 2.3 %, confirming the continuous economic growth.
- PCE inflation component exceeded 2.4 %, while Core PCE increased to 2.7 %, compared to prediction 2.5 %.
- Initial unemployment demands in the United States rose to 224,000 for the week ending February 21, indicating twice the slight labor market.
- Continuous claims in the United States decreased to 1.862 million, overcoming 1.870 million expectations.
- On the Foreign Policy Front, US President Donald Trump planted confusion over the implementation of the customs tariff, which contradicts previous statements.
- The markets interact with the induction uncertainty as Trump doubles on 25 % of the fees on Canada and Mexico, which will enter into force on March 4.
Technical expectations: Dxy: Restore the Bulls Keys levels, but the momentum is still fragile
The US dollar index recovered with a power of 107.00, and the SMA is recovered at 106.60. The RSI and the average medium rapprochement (MACD) indicates improved momentum, but the upward payment still needs confirmation. The resistance lies in 107.30, while support levels appear at 106.60 and 106.00 if there is a reflection.
Fed questions and answers
The monetary policy in the United States is formed by the Federal Reserve (Fed). The Federal Reserve has two states: to achieve price stability and enhance full employment. Its primary performance to achieve these goals is to adjust interest rates. When prices rise very quickly and inflation is 2 % higher than the Federal Reserve goal, it raises interest rates, which increases borrowing costs throughout the economy. This leads to the most powerful USD (USD) because it makes the United States a more attractive place for international investors to stop their money. When inflation decreases to less than 2 % or the unemployment rate is very high, the Federal Reserve may reduce interest rates to encourage borrowing, which weighs on the green back.
The Federal Reserve (Fed) holds eight political meetings annually, as the FOOC Open Market Committee (FOMC) evaluates economic conditions and takes monetary policy decisions. FOMC attends twelve officials of the Federal Reserve-the seven members of the Governor, the President of the Federal Reserve in New York, and four regional regional presidents, the remaining regional regional, who serve for one year on a roundabout.
In extreme situations, the Federal Reserve may resort to a policy called quantitative mitigation (QE). QE is the process that the Federal Reserve increases significantly from the flow of credit in a suspended financial system. It is a non -standard policy scale used during crises or when inflation is very low. The Federal Reserve’s favorite federal weapon was during the great financial crisis in 2008. It includes the printing of the Federal Reserve more than dollars and their use to buy high -quality bonds from financial institutions. QE usually weakens the US dollar.
The quantitative tightening (QT) is the reverse process of QE, as the Federal Reserve stops buying bonds from financial institutions and the manager does not re -invest from mature bonds, to buy new bonds. It is usually positive for the value of the US dollar.
