FOREX
The dollar index stabilised during early Thursday trading. After the ups and downs of the previous two sessions, the greenback is hardly moving in relation to other major currencies as investors await further clues over the resilience of the US economy, with GDP and PCE data due for release today and tomorrow. After last week’s surprisingly dovish Fed meeting, the greenback suffered losses as investors priced in the high likelihood of a first rate cut in March 2024. However, since last week’s meeting, several Federal Reserve officials have tried to curb the markets’ enthusiasm, reminding us that inflation is still above the ideal levels and that the US economy has shown a resilience that gives the Fed headroom to keep rates at the current levels longer. At the same time, yesterday, we saw a drop in risk appetite in the stock markets as traders closed the winning positions of the last couple of weeks in a dynamic that offered support to the haven dollar. Against this background, investors will watch today’s release of US GDP data, knowing that a weak reading could revive demand for risk assets, reignite the bond rally and punish the dollar. In contrast, a strong number could have the opposite effect.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
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