“The US Dollar Index Rises After Important Federal Statements and Economic Data Updates”

Investing.com – Updated at 15:19 GMT

The US dollar index returned to the level of 102.490, an increase of 0.21%, with a price decline of about 1%, and it fell temporarily below the level of $2,000 an ounce.

The rise comes after the statements of the Federal Reserve member, Loretta Mester, who said that the current interest rates are not tightening enough, and hinted at the need to raise interest rates, which is in favor of the dollar.

The view on the Fed’s June decision remains cloudy between the market expecting a pause, the Fed’s statements aiming to fully rely on incoming data and the extent of inflation slowing. Today’s higher retail sales indicated that inflation may not ease as desired.

Updated at 12:52 PM GMT

The dollar index witnessed remarkable fluctuations up and down without a specific destination so far, immediately after the release of US retail sales data. The US dollar index is declining by 0.05, to 102.23 points.

It increased by 0.4%, according to experts’ expectations, while the previous reading recorded -0.4%, but was revised to record -0.5%.

As for it, it recorded a decrease from the previous month and rose by 1.6%. The last recorded rate was 2.94%, but it was revised to record 2.42%. Expectations were for a rise of 4.2%.

At the same time, it recorded an increase of 4%, contrary to experts’ expectations for an increase of 0.8%, as it recorded -0.1% in the previous reading, and was revised to record -0.7%.

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The US dollar index is now down 0.12% to 102.145 against a basket of foreign currencies before the opening. This decline comes despite hard-line federal statements issued by Raphael Bostick on Monday.

Look at the currencies of Asia

On the other hand, most Asian currencies fell on Tuesday as disappointing Chinese economic data reported a weak outlook for the region’s largest economy, while hawkish comments from Federal Reserve officials also created uncertainty about the path of US interest rates.

The price fell 0.1% and traded near a two-month low after data showed lower-than-expected growth in April. The readings, which came on the heels of several weak economic indicators earlier this month, also point to a stunning recovery in Asia’s largest economy, even after the country eased most anti-Covid measures earlier this year.

The weak data also saw markets prepare for a possible 25 basis point interest rate cut by the People’s Bank next month, which is likely to lead to further weakness in the yuan. The currency was trading just shy of the psychologically important level 7 against the dollar.

Weakness in China has spilled over into other Asian currency markets, particularly those with higher trading exposure in the country. Also, it fell 0.1%, while leading losses across Southeast Asia down 0.3%, as traders also booked recent gains for the currency.

It fell 0.1%, after it was also pressured by a sharp decline in the face of rising interest rates and worsening economic conditions.

Federal and important messages

Sentiment towards risk assets was also shaken by a slew of Fed officials who warned that the Fed could still do more to bring down stubborn inflation. Four Fed regional presidents said in separate letters that interest rates are likely to remain high for longer, with some officials also raising the possibility of higher rates.

While it settled and near its highest level in one month on Tuesday, after recording small losses in the previous session. But the dollar continued to strengthen against about 0.1%.

The greenback has moved slightly this week as markets have been bearish in anticipation of more US economic signs this week, starting from and scheduled for release later in the day.

Several other Fed speakers are also lining up this week, most notably on Friday.

It also shows that the markets are still in a position to pause in the Fed rate hike cycle in June. But traders are also taking into account a small chance of a 25 basis point increase.

The possibility that US interest rates will remain higher for a longer period of time also bodes weakly for Asian currencies, as the gap between risky and low-risk returns narrows.

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