The US dollar was steady this morning. This followed a strong session on Wednesday, which saw the Dollar Index retest an area of modest resistance between 97.50-97.70 on the cash. Once again, the dollar was negatively correlated to movements across US equities. The greenback bottomed out as US stock indices peaked early yesterday afternoon.
Source: TN Trader
The dollar then rallied to close near the day’s highs, while US stock indices pulled back from their best levels. Some strong US data helped. Industrial Production rose 0.7% in January, beating expectations, while core Durable Goods Orders and Housing Starts both surprised to the upside. Further support was provided by the minutes of the Fed’s last FOMC meeting.
These were more hawkish than anticipated, with some members suggesting that the Fed’s next interest rate move may be a hike, rather than a cut. Despite this, there was barely any shift in the CME’s FedWatch Tool, which continues to price in two 25bp cuts this year, with the first likely to come in June.
