Dollar sharpens decline to 10-month low after Fed's meeting
Dollar fell in European trade on Thursday against a basket of major rivals, sharpening the losses for the third session, plumbing ten-month lows following Fed's meeting.
The Fed continued to slow down its policy decisions and hiked interest rates by 25 basis points, with Jerome Powell touting the slowdown of inflation in the US.
The Index
The dollar index fell 0.35% to 100.82, the lowest since April 2022, with a session-high at 101.26, after closing down 1% yesterday.
The Fed
The Fed recently increased interest rates by 25 basis points to 4.75%, the highest since September 2007.
Fed Chair Jerome Powell touted the slowdown in consumer prices in recent months, and said the Fed will continue to take decisions every meeting based on the most recent data.
He asserted that policy needs to remain tight for some time, and that Fed officials still need more evidence that inflation is on track towards 2%.
Economic Developments
Recent data decisively agree that inflation is slowing down alongside economic growth, an indication the Fed's policies are taking a toll.
Fed Rates
After the meeting, pricing for a 0.25% rate hike by the Fed in March rose to 85% ahead of US labor data tomorrow.
Gold extends gains to ten-month high on Powell's remarks
Gold prices rose in European trade for the third session in a row, hitting ten-month highs and almost touching $2,000 as the dollar declines.
The Fed extended its policy tightening efforts and hiked rates by 25 basis points as expected, with Powell touting the improvement in reducing US inflation in recent months.
Gold Prices Today
Gold prices rose over 0.4% to $1,959 an ounce, the highest since April 19, with a session-low at $1,950.
Gold prices rose 1.15% on Wednesday, the second profit in a row as the dollar gave up ground.
The Dollar
The dollar index fell 0.35% on Thursday, sharpening its losses for the third straight session and plumbing ten-month lows at 100.82.
A weaker dollar boosts gold prices and makes them more attractive to holders of other currencies.
The Fed
The Fed recently increased interest rates by 25 basis points to 4.75%, the highest since September 2007.
Fed Chair Jerome Powell touted the slowdown in consumer prices in recent months, and said the Fed will continue to take decisions every meeting based on the most recent data.
He asserted that policy needs to remain tight for some time, and that Fed officials still need more evidence that inflation is on track towards 2%.
Economic Developments
Recent data decisively agree that inflation is slowing down alongside economic growth, an indication the Fed's policies are taking a toll.
Estimates
Despite Powell's recent remarks about extending the tight policies, gold prices are still expected to soldier through before facing a resistance at $1,960.
The SPDR
Gold holdings at the SPDR Gold Trust rose 1.44 tones yesterday to a total of 918.5 tones.
Will gold prices pierce $2000?
It's very possible now for gold prices to head above $1,950 and surpass the resistance of $1,960, opening the door towards the important resistance of $2,000, with investors await the crucial US payrolls report tomorrow for more clues.
Euro advances above $1.1 for first time in 10 months ahead of ECB decisions
Euro rose in European trade for the third straight session against dollar, moving above $1.1 for the first time in ten months as concerns about a policy gap between the US and Europe fade.
Dollar extended its losses after the Fed wrapped up its meeting and hiked rates by 25 basis points, with Jerome Powell noting the reduction of US inflation in recent months.
EUR/USD rose 0.4% to 1.1033, the highest since April 2022, with a session-low at 1.0984, after rising 1.2% yesterday, the second profit in a row, and the largest such profit since early December.
ECB
Now investors await the European Central Banks's meeting decisions today, after data showed European inflation slowed down in January.
The ECB is preparing for a 0.5% rate hike for the second meeting in a row to 3%, the highest such level in Europe since 2008.
ECB President Christine Lagarde said recently that inflation remains too high and the bank is committed to continuously increase interest rates until inflation is brought back to 2%.
Lagarde once again repeated the use of the phrase "staying the course" when talking about interest rate decisions at upcoming meetings, meaning the current pace will be maintained at least until the second quarter of the year.
Other ECB members strongly hinted at multiple 0.5% rate hikes in both February and March.
The Dollar
The dollar index fell 0.35% today, plumbing ten-month lows at 100.82 against a basket of major rivals.
The Fed recently increased interest rates by 25 basis points to 4.75%, the highest since September 2007.
Fed Chair Jerome Powell touted the slowdown in consumer prices in recent months, and said the Fed will continue to take decisions every meeting based on the most recent data.
Will euro mark more gains against dollar above $1.1?
Yes it's expected for euro to increase its lead above $1.1 if the ECB opened the way strongly for multiple more 0.5% rate hikes in upcoming meetings, closing the gap between Europe and the US.