SG – Singapore The U.S. dollar remained mostly unchanged on Thursday as traders anticipated next week’s U.S. inflation data and took in statements from several Federal Reserve officials who predicted gradual interest rate increases.
John Williams, president of the New York Fed, stated at a Wall Street Journal event that increasing the federal funds rate to a range between 5.00% and 5.25% “seems like a very fair assessment of what we’ll need to do this year to bring the supply and demand mismatches down.”
Williams’ remarks came after Chair Jerome Powell emphasized on Tuesday that a process of “disinflation” was taking place while standing by his forecast for interest rates.
The index, which compares the value of the dollar to that of six competitors, increased by 0.029% on Thursday to 103.460 after falling by about 0.3% the previous day.
The index is just slightly below the 103.96 one-month high it reached on Tuesday during a short rise in response to the employment data released on Friday, which revealed that non-farm payrolls had increased by 517,000 jobs in January.
The euro was up 0.04% at $1.0713 in the meanwhile, off its one-month bottom of $1.067 reached on Tuesday.
Sterling was last trading at $1.2064, down 0.06% on the day, while the Japanese yen dropped 0.11% to 131.54 against the dollar.
The increased 0.06% to $0.631, while the Australian dollar increased 0.04% to $0.693.
The Fed funds rate is expected to peak slightly above 5.1% by July before declining to 4.8% by year’s end, according to market predictions.
Williams reaffirmed in his remarks that he still thought it was crucial for monetary policy to reach and maintain levels that would halt economic expansion “for a few years.”
The dollar’s speed of recovery was exhibiting hesitant signs of moderating, according to OCBC currency strategist Christopher Wong, although the currency was still moderately supported by remarks from Fed speakers.
Powell’s remarks to the Economic Club of Washington the previous evening were less aggressive, but Fed officials like Williams (and Fed Governor) Lisa Cook took advantage of the occasion to increase the hawkish rhetoric.