U.S. Dollar Extends Rally After Powell's Remarks
February 28 2018 - 2:17AM
RTTF2
The U.S. dollar extended its rally against its most major
opponents in the European session on Wednesday, as the Federal
Reserve Chair Jerome Powell's upbeat assessment on economy and
confidence in attaining inflationary goal raised hopes over the
possibility of four rate increases this year.
In his first Congress testimony, Powell acknowledged that the
economy is strengthening and inflation is moving up, which may
trigger the policy makers to rethink their plan for three
hikes.
"My personal outlook for the economy has strengthened since
December," Powell said. "I wouldn't want to prejudge that new set
of projections, but we'll be taking into account everything that's
happened since December."
Financial markets are pricing in a 33 percent chance of at least
four increases in the benchmark rate this year, up from 20 percent
on Monday.
Investors await U.S. data on fourth quarter GDP, pending home
sales and Chicago-area business activity due later in the day for
more direction.
The currency has been trading in a positive territory against
its major rivals in the Asian session, with the exception of the
yen.
The greenback that closed Tuesday's deals at 1.3905 against the
pound advanced to 1.3860. The greenback is likely to find
resistance around the 1.37 level.
The greenback firmed to 1.2199 against the euro, its highest
since January 18. On the upside, 1.19 is seen as the next
resistance level for the greenback.
Flash data from Eurostat showed that Eurozone inflation slowed
slightly in February on food and energy prices.
Inflation eased to 1.2 percent from 1.3 percent in January. The
rate came in line with expectations.
The greenback reversed from an early low of 0.9386 against the
Swiss franc, rising to near a 3-week high of 0.9437. If the
greenback extends rise, 0.96 is possibly seen as its next
resistance level.
Survey results by the KOF Economic Institute showed that a
measure of the upcoming trends in the Swiss economy unexpectedly
climbed in February, thus stabilizing at a level above its
long-term average.
The Swiss KOF Economic Barometer rose to 108 from 107.6 in
January, which was revised from 106.9. Economists had forecast the
score to ease for a second straight month to 106.
The greenback strengthened to near a 3-week high of 0.7209
against the kiwi, reversing from an early low of 0.7243.
Continuation of the greenback's uptrend may see it challenging
resistance around the 0.69 region.
On the flip side, the greenback held steady against the yen,
after having eased from a high of 107.53 set at 7:15 pm ET. The
pair closed Tuesday's deals at 107.32.
Data from the Ministry of Land, Infrastructure, Transport and
Tourism showed that Japan's housing starts logged a double-digit
decline at the start of the year.
Housing starts decreased 13.2 percent year-on-year in January,
faster than the 2.1 percent drop in December and the expected 4.7
percent decrease.
Looking ahead, Canada industrial product price index for
January, U.S. GDP data for the fourth quarter and pending home
sales for January are scheduled for release in the New York
session.
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