The Dollar is Declining, Looking For Positive Data

The US dollar index, which measures its performance against a basket of six major currencies, declined 16 points during today’s trading, to record 95.87 points, and traded during the day in a range between 95.87 and 96.14 points, thus 0.93% lower than its levels five days ago.

The dollar received some support from the testimony of Jerome Powell, the US Federal Reserve, in which he revealed the need for the Fed to be ready if inflation does not decline during the second half of 2022, and hinted at the possibility of accelerating the pace of reducing bond purchases to control inflation risks, which can no longer be described as temporary.

“Both themes will be fed many fresh inputs over the next four weeks and thinning liquidity conditions point to bumpy conditions in FX markets,” ING said.

Economists expect that the Federal Reserve will continue to tighten policy, leaving room for interest in the United States and the US dollar to rise further at the beginning of next year, especially since recent data indicate a strong growth rate of GDP in the fourth quarter of the United States, which will encourage the Fed to taper faster.

But they ruled out that a faster decrease during the first quarter of 2022 by the Federal Reserve will be followed by huge increases in interest rates, and they expected that the Federal Reserve will be more cautious in raising prices and will eventually raise less than market prices, perhaps it will raise interest once and not 3 As the market expects.

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