US Dollar Gains as Fed Expresses Hope About Economic Outlook
Arslan Butt • 1 min read
The US dollar is trading strong against its major rivals early on Thursday, after the Fed sounded more optimistic than expected about economic recovery in the US and maintained its new strategy about tolerating higher inflation. At the time of writing, the US dollar index DXY is trading around 93.43.
At its last monetary policy meeting before the presidential elections, the Fed committed to holding rates steady near zero to boost employment levels. During the Jackson Hole symposium a few weeks ago, the US central bank announced a major shift in its strategy when it stated that it would allow for inflation tu average around 2% instead of holding it under the level constantly.
On Wednesday, immediately after the Fed released its statement, the dollar weakened. The bearishness was also aided by a weaker than expected retail sales figure. However, chairman Jerome Powell’s optimism around economic outlook turned things around and helped the US dollar climb higher.
After the Fed’s meeting, traders are now focused on the upcoming elections due to take place in November. In addition, updates about the next round of fiscal stimulus can also drive moves in the US dollar in the coming weeks.