Select Language

US Dollar gains as dovish Fed bets cool down

blockHeadVisual
  1. HOME
  2. Get information
  3. World FX news
  4. US Dollar gains as dovish Fed bets cool down

World FX news

search
Breaking news

US Dollar gains as dovish Fed bets cool down

  • X
  • facebook
  • LINE
  • RSS
  • X
  • facebook
  • LINE
  • RSS
New update 2024.11.13 03:08
US Dollar gains as dovish Fed bets cool down

update 2024.11.13 03:08

  • The US Dollar clings to its latest gains with the DXY above 106.00.
  • Expectations for additional interest rate cuts by the Federal Reserve have waned.
  • Important US data releases this week will shape the outlook for monetary policy and forex.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, is clinging to its latest gains in the US session on Tuesday. Expectations for additional interest rate cuts by the Federal Reserve (Fed) have waned, and important US data releases in the coming weeks will shape the outlook for monetary policy. These include Consumer Price Index (CPI) and Retail Sales data later this week.

The DXY is anticipated to continue its uptrend, supported by strong US economic fundamentals. The upcoming release of inflation data and Retail Sales figures is expected to bolster the US Dollar. Despite profit-taking and easing labor conditions, the Fed remains optimistic about the economy, and the Greenback's overall trend remains positive.

Daily digest market movers: US Dollar rally continues, Fed easing expectations shift

  • Fed easing expectations shift with the market pricing in only 70% odds of a follow-up cut in December.
  • The swaps market is pricing in around 50% odds of a December cut, showing a significant shift from September's pricing.
  • The market is now pricing in 75 to100 bps of total easing over the next 12 months.
  • In addition, investors are pricing in a terminal rate near 3.5% compared to 2.5% in September.
  • Fed officials are likely to reinforce the cautious tone this week.

DXY technical outlook:  Greenback approaches overbought levels

The DXY index indicators lie deep in positive terrain, but the Relative Strength Index (RSI) lies near 70. Its proximity to overbought levels suggests a potential for a pullback or consolidation in the near term. However, the overall technical outlook remains bullish, with indicators pointing to further upside potential.

In case of a correction, the 105.00-105.50 level might be used as a support to consolidate gains.

 

US Dollar FAQs

The US Dollar (USD) is the official currency of the United States of America, and the 'de facto' currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world's reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed's 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed's weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.

 

Date

Created

 : 2024.11.13

Update

Last updated

 : 2024.11.13

Related articles

Show more

Writer

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?
No loading Yes loading

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Previous article

prev

Mexican Peso tanks on Trump cabinet picks, trade war concerns

Next article

Forex Today: US CPI data takes centre stage amidst Dollar rally

prev

Most viewed

NZD/USD extends losses to three-month lows near 0.5870, US PPI awaited

NZD/USD extends its decline for the third consecutive day, trading near 0.5870, marking a three-month low during Thursday's Asian session.
New
update2024.11.14 11:54

Silver Price Forecast: XAG/USD drops to nearly two-month low, 100-day SMA breakdown in play

Silver (XAG/USD) attracts some follow-through selling during the Asian session on Thursday and drops to its lowest level since September 19 in the last hour.
New
update2024.11.14 11:41

Japanese Yen drops to fresh multi-month low against USD, bears not ready to give up

The Japanese Yen (JPY) remains on the back foot against its American counterpart for the fourth consecutive session as of Thursday and slides to the lowest level since July 24 during the Asian session.
New
update2024.11.14 11:32

USD/INR flat lines near all-time low ahead of Indian WPI inflation data

The Indian Rupee (INR) holds steady near its all-time low on Thursday.
New
update2024.11.14 11:24

Australian Dollar edges higher following employment data, RBA Bullock comments

The Australian Dollar (AUD) breaks its four-day losing streak against the US Dollar (USD) following the key economic data release on Thursday.
New
update2024.11.14 10:41

PBOC sets USD/CNY reference rate at 7.1966 vs. 7.1991 previous

On Thursday, the People's Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1966, as compared to the previous day's fix of 7.1991 and 7.2326 Reuters estimates.
New
update2024.11.14 10:16

WTI recovers to near $68.00, stronger US Dollar might cap its gains

West Texas Intermediate (WTI), the US crude oil benchmark, is trading to around $67.90 on Thursday.
New
update2024.11.14 08:56

USD/CAD rises to near 1.4000 on bullish US Dollar, eyes on US PPI da

The USD/CAD pair gains momentum to near 1.4000, the highest level since 2020 during the early Asian session on Thursday, bolstered by the stronger Greenback.
New
update2024.11.14 08:34

RBA's Bullock: Rates are restrictive enough, staying there until confident on inflation

Reserve Bank of Australia Governor Michele Bullock said on Thursday that the interest rates are restrictive enough and will stay there until the central bank is confident about inflation.
New
update2024.11.14 08:32

EUR/USD continues to grind out further losses

EUR/USD continued to drift into the basement on Wednesday, clipping into a 54-week low and settling within touch range of 1.0550.
New
update2024.11.14 07:59

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

arw
  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Line

Line
Facebook

Facebook
X

Twitter
Cancel