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01.03.202314:50 Форекс анализи и прегледи: U.S. inflation is rising again: How will this affect the dollar?

Exchange Rates 01.03.2023 analysis

The most recent U.S. inflation reports were surprisingly higher than expected, rather than showing a continued decline in inflationary pressures. Compared to December, core PCE rose 0.6% in January, bringing the PCE to 5.382% year-on-year.

The Federal Reserve will hold its next FOMC meeting on March 22–23. Prior to this meeting, important reports will be released that will help formulate the next interest rate hike by the Federal Reserve.

On March 10, the U.S. Department of Labor will release its latest employment report for February. Then on March 14, the government will release the CPI inflation index for January. Together, these two reports will be the most recent data used by the Federal Reserve to determine the amount of the next rate hike.

To stop the growth of inflation, the Fed will raise rates again. The question is how much? Will the dollar strengthen?

The U.S. dollar index is down 0.6% against a basket of currencies so far.

Exchange Rates 01.03.2023 analysis

In February, the index rose almost 3%, its first monthly gain after a four-month losing streak. As U.S. economic data released in recent weeks has raised market expectations that the Federal Reserve should continue to raise rates.

According to the CME's FedWatch, there is a 73.8% chance that the Fed will raise rates by 25 basis points. And there is also 26.2% that the Fed will be more aggressive with a 50 basis point rate hike.

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