The value of the dollar rises as the US Federal Reserve improves
In a major victory for the US economy, the US Federal Reserve announced the economy was improving and its tolerance for higher inflation had increased in statements released Thursday. As a result of the statements, the value of the US dollar has risen against some major world currencies.
At the meeting, federal authorities pledged to maintain a zero rate until 2023, when the market will reach âmaximum jobs,â according to economists.
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Given that the US Federal Reserve is doing well, experts have also expressed positivity about the improving US economy, which has been hit hard by the COVID-19 pandemic.
The dollar index rose against 6 major world currencies at 0.32 percent to trade at 93.493. It also stands at 1.1763 against the euro.
Initially, the value of the US dollar declined after news of an expected weakness in US retail sales. However, it rose rapidly after Jerome Powell commented on the improvement in the US Federal Reserve.
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After the comment, the yield on the US Treasury rose dramatically overnight by 0.7%. Mitsuo Imaizumi, a strategist at Daiwa Securities compared this increase with the Jack Hole Symposium.
Imaizumi said the market reacted similarly after Jerome Powell revealed a new executive in August. The yield on the US Treasury also rose dramatically after last month’s announcement.
Experts believe that more financial incentives must be given to the market in order to maintain and increase economic activities.
Another Barclays strategist said that since the November presidential elections closed, the US Federal Reserve and the economy will be at the center of attention. In addition, revival negotiations are still ongoing in Congress. He further mentioned that the marketers were all watching how the talks would turn out.
Among Asian currencies, the Australian dollar rose slightly, and for a brief period after the release of strong employment data. However, it declined again after the dollar’s value overwhelmed all major currencies. It was trading at 0.53%. Now it has fallen to 0.72665 percent.
On Thursday, the Bank of Japan also reported that the Japanese economy was in dire straits. However, they believe it will improve without an immediate stimulus package in the near future. The move comes just as Yoshihide Suga takes on the role of current Japanese Prime Minister. Marketers are now waiting to see how the new administration handles monetary policies.
Unlike the US Federal Reserve, the value of the pound is still largely dependent on Brexit plans. British politics have been turbulent recently with reports of rebellion within the Prime Minister’s own party. The pound fell 3.5% to settle at $ 1.2932.
It has been reported that the English government will inject stimulus funds to revitalize economic activities in the country, which has been severely affected by the COVID-19 pandemic.
New Zealand, on the other hand, does not share the same news as the US Federal Reserve. The kiwi is currently trading at $ 0.6690.
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