USD climbs ahead of Federal Reserve congressional testimony
Tuesday 7 March, 2023
Daily Currency UpdateThe USD is climbing ahead of Federal Reserve Chairman, Jerome Powell’s, 2 day congressional testimony which begins this morning. Markets will be watching closely for guidance on just how aggressive further rate hike action from the US Federal Reserve will be. US economic data in recent weeks has been strong, and numerous Fed governors have reiterated that they will likely need to keep US interest rates higher for longer to fight inflation. Employment remains another of the key mandates for the Fed and the upcoming unemployment and non-farm payroll indicators will be under scrutiny as key influencers for the March 22nd rate announcement. Today the US wholesale inventories forecast is set to come in at -0.40%, a low reading indicating stronger economic growth. The consumer credit report is also set to be released at an anticipated 20 billion versus the previous print of 11.56 billion. While up, this is still considerably off the highs of last year’s 45 billion.
Key MoversThe AUD/USD has plunged following another 25 basis point hike by the Reserve Bank of Australia to a rate of 3.6%. This was a change in course from a previously indicated pause at 3.35%. Furthermore, the Royal Bank of Scotland now indicates that further hikes are possible in the future in order to fight inflation, which is currently at a 3 decade high for the country. This decision contrasts with Canada’s moves, where the Bank of Canada has announced a conditional pause to let the economy digest rate actions over the past year. The GBP/USD got a small lift from the UK Halifax House Price Index which saw a 1.1% price rise for the month of February. This comes after positive Purchasing Managers’ Index data from the UK construction sector, as well as positive retail sales data which came in at 4.9% for February in comparison to 3.9% in January.
- EUR/USD: 1.0620 - 1.0694 ▲
- GBP/USD: 1.1939 - 1.2060 ▲
- AUD/USD: 0.6635 - 0.6748 ▲
- USD/CAD: 1.3600 - 1.3718 ▲