The US dollar rose in the European market on Tuesday against a basket of global currencies, resuming its gains that stopped yesterday as part of a correction from the highest level in three weeks, as activity was observed in purchases of the US currency as the best available investment.
This is after aggressive comments by some Federal Reserve officials led to a decline in the chances of cutting US interest rates next March, and increased the strength of the hypothesis of keeping interest rates high for the longest period this year.
Price view
US dollar index
The dollar index rose by 0.25% to the level of (102.48) points, from the opening level of today’s trading at (102.22) points, and recorded the lowest level at (102.11) points.
The index ended trading yesterday, Monday, with a decline of 0.2%, due to correction operations and profit taking, after recording on Friday the highest level in three weeks at 103.1 points.
Federal comments
Atlanta Federal Reserve Bank President Rafael Bostic said on Monday: I expect an initial interest rate cut in the third quarter of this year. Bostic explained: I see a quarter-point reduction in interest rates as appropriate by the end of the year.
Bostic added: US inflation has fallen more than I had previously expected, and inflation and employment have not yet collided yet.
Federal Reserve Board of Governors member Michelle W. Bowman said: Policy appears restrictive enough to achieve the inflation target of 2%. Bowman added: We have not yet reached the point where lowering interest rates is appropriate.
American interest
Following these comments, futures pricing for the odds of a cut in US interest rates by about 25 basis points next March fell from 65% to 60%, and the odds of a cut in May from 95% to 94%.
In order to re-evaluate these possibilities, investors are awaiting later this week the release of key inflation data in the United States for December, which shows the extent to which inflationary pressures have affected US monetary policy makers.
