On Wednesday, the US Dollar Index (DXY) measured against a basket of six major currencies had extended its recent leg of blowout gains and wrapped up the day at a two-month peak as a barrage of upbeat economic data signalling a near term economic recovery alongside an uptick in inflation later this year stoked prospects of a higher interest rate and a shift of Fed’s policy-easing measures, which in turn had helped the greenback gain footings against a flurry of major and emerging market currencies.
If truth is to be told, the American currency’s gains in the day’s FX market have been across the board that came against the backdrop of a raft of upbeat economic data alongside January 26-27 FOMC minutes reports that underscored a number of blazing issues including a rise in inflation later this year alongside an accommodation of policy measures to create job opportunities while keeping a lid on inflation indicators.
Though, the report had also signalled that the Fed policymakers had agreed to tolerate a higher inflation level in exchange for an influx of fresh capitals into the US labour market.
US Dollar gains on upbeat data, strengthening inflation
Aside from that, as a raft of riant economic data had helped the American currency attain a safe-haven bid, US Commerce Department said earlier in the day that the US retail sales rose by 5.3 per cent to a seven-month peak in January, while US manufacturing output remained solid.
Besides, the US Labour Department said in a separate statement that the US Producer Prices Index surged by the most since December 2009 in January by 1.3 per cent, eventually stoking frets of a hike in inflation later this year which in particular had aided the causes of American currency.
Citing statistics, in the day’s FX market round off, the US Dollar Index (DXY) measured against a basket of six major currencies on an average rose 0.31 per cent to 90.91, though analysts said that the greenback might hit a critical resistance level at 91.0 considering its 100-day moving average.
Besides, the bloc’s single currency euro shed 0.6 per cent to $1.2040, while the British pound fell 0.3% to $1.3954 against its American counterpart. Meanwhile, referring to an economic recovery on sight, a chief market strategist at Bannockburn Forex in New York, Marc Chandler said, “Today’s retail sales data was not just stronger than expected, it blew the estimates away. Same with industrial output. ”