US Dollar Steady After FOMC Signals a More Dovish Outlook
Arslan Butt • 1 min read
On Thursday, the US dollar is trading steady, close to the highest level in a month amid worries about the Fed remaining dovish well into next year to aid economic recovery in the US. At the time of writing, the US dollar index DXY is trading around 96.17.
The safe haven appeal of the US dollar received some support from the FOMC’s gloomy observations about the state of the US economy in the wake of the ongoing coronavirus crisis. The Fed confirmed that it will continue to keep interest rates close to zero into next year to help the US economy recover.
While markets were expecting the Fed to sound dovish, the central bank’s policymakers sounded even more accommodative about the monetary policy than expected, which helped strengthen the safe haven appeal of the dollar. In recent weeks, the US dollar had been weakening against other riskier currencies amid an improvement in market sentiment over hopes for economic recovery as countries emerged out of lockdown.
According to Fed chairman Jerome Powell, “It is a long road. We can use our tools to support the labour market and the economy, and we can use them until we fully recover.”
Later today, the US dollar could see some moves following the release of the latest weekly jobless claims figures for the past week. Economists expect the number of people filling for unemployment claims to show a slight easing from last week’s figures, which could support the greenback.