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The U.S. Dollar Index , a measure of the U.S. dollar (USD) against six other major currencies, fell to around 104.80 on Thursday, just below its highest level since April. However, rising U.S. bond yields may provide support for a stronger dollar. At press time, the 10-year U.S. Treasury yield rose 0.66% to 4.29%.
The dollar’s strength continues to be supported by U.S. (US) economic data, and the greenback’s outlook differs compared to the euro zone, which is showing increasing signs of economic distress. The U.S. economy is performing strongly and appears to be gradually containing the economic slowdown.
In addition, the number of initial jobless claims in the United States for the week ended September 2 was 216,000, which was better than the expected value of 234,000 and lower than the previous revised value of 229,000. Improved labor market data may support the dollar’s resilience.
U.S. Treasury Secretary Janet Yellen said on Sunday as she returned from the G20 summit that she was increasingly confident the United States could contain inflation without causing major damage to the job market. Have faith. Yellen also said that every indicator of inflation is declining.
Chicago Fed President Austan Goolsbee once issued a statement saying that the Fed’s goal is to push the economy onto a “golden path.” This path means a pullback in inflation without triggering a recession, a delicate balance central banks often strive to achieve to keep economies stable and growing.
In a statement last week, New York Fed President John Williams maintained a flexible stance on future U.S. interest rate policy. Williams acknowledged a pullback in inflation and noted that the economy was achieving a better balance. That suggests an immediate interest rate hike later this month may not be necessary, signaling that the Fed remains cautious about monetary policy.
In addition, investors are eagerly awaiting signals from the Federal Reserve that it intends to maintain high interest rates for the long term. Additionally, traders expect the Federal Reserve may raise interest rates by 25 basis points before the end of 2023. This hawkish stance from the central bank is likely to provide further support for the dollar.
Investors are likely to focus on the U.S. Consumer Price Index (CPI) for August, due out on Wednesday. The data is expected to provide valuable signals on the inflation situation and may influence investors’ trading decisions on the U.S. dollar.
