4 Apr 2022 • Daily News • 1 min read

USD Strengthened On Positive Recovery Signals

Friday’s solid non-farm payrolls report has buoyed USD into a new week of trading. The US Dollar Index opened Monday with an advance towards a 3-day high, continuing its month-long consolidation above ascending trendlines.

Despite job numbers falling slightly short of forecasted values, analysts generally agreed that the NFP report was a positive sign for post-pandemic recovery. As a result, investors are preparing to face more aggressive fiscal tightening from the Federal Reserve. In particular, the possibility of more than one 50 basis-point hike seems increasingly likely as the Fed seeks to reduce the size of its balance sheet.

Meanwhile, the immediate focus for the week will be on the release of FOMC meeting minutes on Wednesday. The Fed will weigh tapering plans against ongoing geopolitical tensions in Europe, with escalating food and energy prices potentially encouraging a more hawkish outlook.

Further rate hikes may well sustain the greenback’s bullish action and enhance its position against emerging market currencies in the current economic climate. Against USD optimism, equity markets have been muted since the central bank pared back its asset holdings.

US crude oil inventories will also draw attention on Wednesday in light of international supply concerns. Elsewhere, forex traders will eye opportunities around Tuesday’s interest rate decision from the Reserve Bank of Australia. Finally, Thursday sees the publication of European Central Bank meeting notes.

*No information on this site is directed at nor does it intend to elicit citizens and/or residents of the USA, and is not intended for distribution to or use by any person in any jurisdiction where such distribution or use would be contrary to local law or regulation.

**Risk Warning: Trading leveraged products such as Forex may not be suitable for all investors as they carry a degree of risk to your capital. Please ensure that you fully understand the risks involved, taking into account your investment objectives and level of experience, before trading, and if necessary seek independent advice.