Dollar Remains Near Lows as Fed Shrugs Off Rising Commodity Prices

Dollar Remains Near Lows as Fed Shrugs Off Rising Commodity Prices
© Reuters.

By Peter Nurse

Investing.com – The dollar was largely unchanged Thursday near multi-week lows after the U.S. Federal Reserve maintained its very dovish monetary policy, boosting confidence in the global economic recovery.

At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was flat at 90.610, trading not far away from a nine-week low.

traded down 0.1% at 1.2119, after earlier hitting its highest level against the dollar since late February, rose 0.2% to 1.3962, rose 0.2% to 108.78. The risk-sensitive rose 0.1% to 0.7794 and climbed 0.1% to 0.7258.

The decided on Wednesday to leave the policy interest rate near zero and kept a $120 billion monthly pace of asset purchases, while acknowledging that there had been an improvement in the economic conditions.

In the press conference that followed the policy statement, Fed chairman continued to signal that policy will remain steady for some time, to the benefit of the global economy, with inflation risks distorted by the pandemic-related decline in prices last year.

“The inflation rate will increase markedly above 2% but the Fed considers it transitory due to bottlenecks and base-effects. The only true inflation stems from the labor market (according to the Fed), why the labor market is now the one to watch,” said analysts at Nordea, in a note.

That said, the Commerce Department will publish its snapshot of first-quarter growth on Thursday at 8:30 AM ET (1330 GMT). The economy is expected to have grown at a 6.1% annualized rate in the first three months of the year, which would be the second-fastest GDP growth pace since the third quarter of 2003 and would follow a 4.3% rate in the fourth quarter.

And that’s before the impact of the $1.8 trillion package for families and education that President unveiled Wednesday in his first joint speech to Congress. 

Elsewhere, edged higher to 8.1972, ahead of the first public policy presentation by Turkey’s new central bank Governor Sahap Kavcioglu.

Kavcioglu is expected to raise inflation forecasts as the recent slide in the lira, following the abrupt sacking of his predecessor, exposed the limited room to deliver the interest-rate cuts sought by President Recep Tayyip Erdogan.

 

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.