Home Business News Dollar and Euro await central banks’ clues

Dollar and Euro await central banks’ clues

6th Mar 24 9:25 am

The dollar index experienced a slight decline after facing renewed pressure earlier in the week.

Negative reactions to recent U.S. economic data, including reports on factory orders and the services sector, which indicated a slowdown in economic activity, contributed to this decline.

Attention has shifted to Federal Reserve Chair Jerome Powell’s testimony before the U.S. Congress, where he could provide insights into the potential timing and magnitude of interest rate adjustments.

Moreover, the market awaits Friday’s release of the monthly jobs report for further economic guidance, including Non-Farm Payrolls for February. A robust NFP figure could bolster the U.S. dollar as it could potentially prompt the Fed to keep its tight monetary policy. Conversely, a lower-than-expected figure could weaken the greenback and fuel hopes for a rate cut.

On the other side of the Atlantic, the euro remained relatively flat, although slightly positive, nearing its level on February 1st.

Despite reports of a slowdown in the inflation rate, which slightly exceeded expectations, and a moderation in the core rate, suggesting weaker-than-anticipated inflationary pressures, the European Central Bank’s (ECB) cautious stance on monetary policy easing tempered expectations.

As a result, the ECB could abstain from softening in policy, potentially limiting the euro’s upside momentum in the short term. Market attention turned towards the upcoming ECB monetary policy meeting tomorrow, where policymakers are expected to maintain interest rates unchanged. Traders will closely watch any statements from President Christine Lagarde regarding the timing of potential interest rate adjustments.

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