The US Dollar strengthens as several BRIC countries express support for the currency, while Fed officials remain quiet on rate cuts, and geopolitical tensions boost the Greenback during US trading hours.
The dollar is expected to continue strengthening as bond yields rise, with the Fed likely to hike rates at least once more this year, and a barrage of economic data this week will heavily influence Fed policy decisions and impact the direction of the dollar and interest rates.
The US dollar is defying expectations and reaching its highest level in six months, proving that talk of de-dollarization has been over-hyped.
US inflation remains above 3% as the cost of goods and services rose by 0.2% in July, prompting speculation that the Federal Reserve may freeze interest rates to manage inflation without causing a recession.
US consumer spending increased by the most in six months in July, driven by strong demand for goods and services, but slowing inflation rates suggest that the Federal Reserve will keep interest rates unchanged next month.
The Federal Reserve is expected to hold interest rates steady this month, but inflation could still lead to additional rate increases.
The U.S. is currently experiencing a prolonged high inflation cycle that is causing significant damage to the purchasing power of the currency, and the recent lower inflation rate is misleading as it ignores the accumulated harm; in order to combat this cycle, the Federal Reserve needs to raise interest rates higher than the inflation rate and reverse its bond purchases.
The Federal Reserve is considering whether to raise interest rates even higher to combat inflation, but some policymakers believe that the current level is sufficient and should be maintained for an extended period.
The dollar has reached a five-month high as investors anticipate the need for elevated interest rates due to the strong US economy, with factors such as weak growth in China and Europe, rising US yields, and falling equity prices further supporting the case for dollar strength.
The dollar strengthens against the yen and keeps the euro and sterling near three-month lows as investors rely on the resilience of the U.S. economy, while China's onshore yuan hits a 16-year low due to a property slump and weak consumer spending.
The Canadian dollar strengthened against the US dollar as stronger-than-expected jobs data raised the possibility of another interest rate hike by the Bank of Canada.
The value of the U.S. dollar has been strengthening against the Euro and the British Pound due to the continuing strength of the U.S. economy and the weakness of the European economies.
Inflation in the US is expected to accelerate again, with economists predicting a monthly rise of 3.6%, suggesting that price pressures within the economy remain a challenge in taming high inflation.
The U.S. dollar stabilized as traders await U.S. inflation data, while sterling weakened after the U.K. economy contracted more than expected in July.
Stronger-than-expected U.S. economic data, including a rise in producer prices and retail sales, has sparked concerns about sticky inflation and has reinforced the belief that the Federal Reserve will keep interest rates higher for longer.
August inflation rose to 3.7%, the highest month-to-month increase since June 2022, driven by rising gas prices, which accounted for over half of the rise, while prices for shelter and food remained elevated; however, the Federal Reserve's reaction to the data is uncertain as there are signs of prices moderating but also concerns over inflation remaining too high.
Foreign holdings of U.S. Treasuries increased for a second consecutive month in July, reaching $7.655 trillion, despite uncertain interest rates and mixed economic data, with China's holdings dropping to the lowest level since 2009, potentially due to pressure to defend its weakening currency.
The Federal Reserve's continued message of higher interest rates is expected to impact Treasury yields and the U.S. dollar, with the 10-year Treasury yield predicted to experience a slight increase and the U.S. dollar expected to edge higher.
The U.S. Federal Reserve kept interest rates steady but left room for potential rate hikes, as they see progress in fighting inflation and aim to bring it down to the target level of 2 percent; however, officials projected a higher growth rate of 2.1 percent for this year and suggested that core inflation will hit 3.7 percent this year before falling in 2024 and reaching the target range by 2026.
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