USD Climbed on Fed’s Hawkish Comments over Asset Tapering

On Thursday, August 5, the USD climbed over the Federal Reserve Chairman Jerome Powell’s hawkish comment on early asset tapering and interest rate hikes.

The Dollar Index, which trails the greenback in opposition to its six other rival currencies, jumped 0.10% at 92.302. It was pulled away from its 91.775 one-month low last week.

An analyst said that the USD has been in a state of irregularity over the past months.

First, it rose following the Fed’s June policy meeting when policymakers brought forward the timetable for interest rate hikes.

After that, USD fell after Fed Chair Jerome Powell said last week that the increase in interest rate still has a long way to go.

Last Wednesday, Fed Vice Chair Richard Clarida was viewed as dovish. It is because of his statement that the conditions for an interest rate hike could be reached next year.

This set the stage for a move in early 2023 which made the USD take another turn.

Moreover, Wednesday’s data were mixed as the ADP non-farm employment change slid 330K.

It was slashed more than double its previous data of 680K and analysts’ 695K forecast.

Meanwhile, the US ISM non-manufacturing PMI came with the strongest ever reading of 64.1.

It is higher against its previous 60.1 record and analysts’ 60.5 estimates.

Later in the day, the initial jobless claims will be released. Experts forecasted an improvement of 384K compared to its previous 400K data.

Nonetheless, Friday’s nonfarm payrolls attract the most attention. It has a median forecast of 870,000 jobs against its previous 850K.

However, there is a wide range of projections due to the impact of the COVID-19 delta variant surge in the labour market.

Currency Exchange Rates over USD

On other currency exchange rates, the USD/JPY and EUR/USD both traded higher to 0.20% at 109.66 and 0.10% at 1.1839, respectively.

Likewise, the GBP/USD also climbed 0.10% to $1.3893 ahead of the Bank of England’s policy meeting later in the day.

An analyst stated that the central bank could tighten its monetary policy while raising its inflation and growth estimates.

Consequently, the risk-sensitive AUD/USD also jumped 0.20% to 0.7397. 

It was boosted by the Aussie trade data that was released earlier this day. It was reported that the exports spiked 4% month over month in June.

On the other hand, the USD/CHF and the USD/CAD both plummeted 0.09% to 0.9062 and 0.06% to 1.2528, respectively.