USD gaining momentum without future rate cuts
Daily Currency Update
The US Dollar Index (DXY) rose above 104.3, bouncing back after experiencing losses in two consecutive sessions. This recovery was prompted by recent data that strengthened the belief that the Federal Reserve is not considering rate cuts.Economically, the weekly US Jobless Claims align with the US Jobs Report released on Friday. Significant layoffs have yet to occur (as of now), reinforcing the strength of the USD in morning trading.
Key Movers
EURUSD experienced a modest recovery, surpassing $1.075, following its dip to a two-and-a-half-month low of $1.072 on February 5. The rebound occurred as major central banks in Europe and the US were cautious about possible rate cuts.GBPUSD remained stable at $1.26, maintaining its position after reaching a seven-week low of $1.2515 on February 5. Investor expectations for early interest rate cuts in both the UK and the US were subdued, influenced by cautious statements from officials in both nations. Bank of England Deputy Governor Sarah Breeden suggested a shift in focus towards evaluating the duration of interest rates at their current level rather than immediate considerations of further increases. This signals a deliberate approach by the central bank, indicating that rate cuts are not being hastily implemented.
AUDUSD experienced a significant decline, dropping below the psychological support level of 0.6500 during the early New York session. The Australian dollar faced a pronounced sell-off, with investor anxiety heightened due to the lack of potential economic triggers. The RBA recognized that inflation in the fourth quarter decreased more than anticipated. However, there is uncertainty about when inflation will rebound to the targeted 2-3%. The country's consumer price index, which increased by 4.1% year-on-year in the fourth quarter, showed a slower pace compared to the 5.4% recorded in the third quarter and fell below the forecasted 4.3%.
Expected Ranges
- EUR/USD: 1.0788 - 1.0743 ▲
- GBP/USD: 1.2638 - 1.2575 ▲
- AUD/USD: 0.6531 - 0.6481 ▲
- USD/CAD: 1.349 - 1.3449 ▼