Market Analysis

The dollar is trading flat following yesterday’s volatility

FOREX

The US dollar is trading flat during the early part of Friday session, a calm that follows yesterday’s volatility. The release of US inflation data on Thursday, which surprised to the upside, initially propelled the dollar index to a level above the 96 points mark. However, the rise was shortly followed by a sharp drop. The high inflation number would normally support the greenback, reinforcing the narrative of more and faster tightening by the Federal Reserve, but that appears to be just part of the picture The Fed’s hawkish tilt is already heavily priced into the value of the dollar, while other central banks are also turning towards tighter monetary policies, as rising inflation is a global story that stretches beyond the US. Against this backdrop, it appears that many investors moved to close wining positions on the dollar after the release of inflation, a dynamic that reversed the initial gains and opened the way for a volatile Thursday session in the foreign exchange markets.

Source: ActivTrader

 

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