US dollar rises as Powell issues a stern warning about rate hikes
The US Dollar (USD) is slightly lower on Friday morning in Europe. After soaring overnight owing to Federal Reserve Chairman Jerome Powell’s hawkish comments. Which took traders off guard. The Fed’s Chairman said that policymakers are not afraid to raise interest rates further if necessary. Contradicting market expectations that the Fed is done raising and that cuts are on the way.
The surprise was compounded by the fact that both Atlanta Fed President Raphael Bostic. And Richmond Fed President Thomas Barkin had already provided disappointing results. Comments that are dovish.
Traders were taken aback when Powell made unexpectedly hawkish remarks.
On the economic data front, traders will need to weigh Powell’s remarks before moving into the weekend. With only one Fed speaker remaining, the preliminary Michigan Consumer Sentiment Index and Consumer Inflation Expectations will be the focus on Friday. If things continue to fall, the US Dollar Index (DXY) may be seen retracing its gains from late Thursday evening and ending the week flat or with a tiny profit.
Daily market movers:Powell is responsible for the US dollar strength.
The following are the key takeaways from US Federal Reserve Chairman Powell’s address on Thursday evening:
“We are not confident that we have achieved the right stance for inflation.”
“Continued inflation progress is not assured.”[The] Fed will not pause. If necessary, tighten even more. We are not confident that we have done enough to attain the 2% inflation target.”
At 12:30 GMT, Dallas Fed President Lorie Logan is scheduled to speak.
The sole significant data point on Friday will be the preliminary November report from the University of Michigan:
Consumer Sentiment is predicted to decline slightly, from 63.8 to 63.7.
In October, the 5-year Consumer Inflation Expectation was 3%.
Equities are not reacting positively to Powell’s speech: The Chinese Hang Seng is down more than 1%, and European shares are down more than 0.50%. US equities futures are trading modestly higher in the pre-market.
Furthermore According to the CME Group’s FedWatch Tool, markets are pricing There is a 90.7% possibility that the Federal Reserve will hold interest rates steady at its December meeting.
Moreover After Powell reiterated that more hikes may be needed to combat inflation, the benchmark 10-year US Treasury yield trades at 4.60%.
