June 5, 2023

Dubai Week

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Dollar 3-week low as Fed’s Powell less hawkish than feared

SHARJA 24 – Reuters: The US dollar fell to a three-week low against major peers on Thursday after Federal Reserve Chairman Jerome Powell eased traders’ concerns about continued aggressive monetary tightening.
The dollar index, which measures the greenback against six rivals, fell overnight after the central bank raised the benchmark rate by 75 basis points as expected, while other economic indicators softened, although the labor market remained strong. Read the full story

The dollar index = USD was slightly higher at 106.54 in early Asian trade after falling 0.59% overnight. Below 106.1 will be the lowest since July 5th.

The two-year Treasury yield US2YR=RR, which is particularly sensitive to policy expectations, fell to its lowest level of 2.9878% this week, adding further weight to the dollar.

That was 23 basis points higher than the 10-year yield US10YR=RR.

Whether the US economy meets the definition of a technical recession by posting two straight quarters of contraction will be known later Thursday with the release of GDP figures, the market’s next key focus.

Japan’s currency, which is highly sensitive to US yields, gained on Thursday. A dollar bought JPY=EBS at 136.325 yen, down 0.2% from Wednesday.

The euro EUR=EBS fell 0.08% to $1.0191, but followed a 0.82% gain overnight.

Sterling GBP=D3 was down 0.09% at $1.2146, having gained 1.06% on Wednesday.

Cryptocurrency bitcoin BTC=BTSP was down 0.58% at $22,836.57, giving rise to more than 8% from the previous session.

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