The US dollar index hovered around 101.5 on Thursday (June 25th). This position keeps the dollar near its highest level in more than a year. This strengthening occurred because investors still expect the Federal Reserve to raise interest rates this year.
This sentiment emerged after the Fed signaled greater support for a tighter monetary policy. Fed Chairman Kevin Warsh also reiterated his commitment to restoring price stability. This statement further convinced the market that the US central bank would not ease its stance anytime soon.
Expectations of an interest rate hike outweighed the positive impact of progress in peace talks between the United States and Iran. This diplomatic progress has pushed oil prices back down to pre-conflict levels, helping to ease inflation concerns. However, for the market, the Fed’s policy direction remains the primary factor determining the dollar’s movements.
Investors are now focused on the PCE price index report, the Fed’s favorite inflation measure. In addition, the market is also awaiting the release of other important data, such as final figures for first-quarter economic growth, May personal income, initial durable goods orders, and weekly jobless claims through June 20. This data will provide important clues to predict the direction of interest rates and the dollar’s future movements. (asd)
Source: Newsmaker.id