FX midday report: US dollar climbs to three-month high

The US dollar rallied to a three-month high at the end of the week after Fed President Jerome Powell on Thursday did not attach particular importance to the recent rise in US bond yields and reiterated the Fed’s ultra-loose monetary policy.

The US dollar continued its broad-based rally in European trading on Friday morning (as measured by the US dollar index) to a three-month high following yesterday’s comments from Federal Reserve President Jerome Powell on US monetary policy.

Federal Reserve President Jerome Powell’s comments yesterday on US monetary policy disappointed market participants. At a Wall Street Journal event, Powell reiterated the Federal Reserve Bank’s (Fed) stance that it should maintain its ultra-loose monetary policy. The recent surge in bond yields, while “remarkable,” said Powell, but not “disorderly”. After Powell’s speech, yields on ten-year US Treasuries rose again above the 1.50 percent mark and thus near their one-year high of around 1.60 percent last week, while the US dollar rose and gold continued to decline.

On the data side, it was reported yesterday that 745,000 initial jobless claims were made in the week up to February 27th. They were less than the consensus analysts expected 750,000, but more than the 736,000 in the previous week. The focus is now on the publication of the US labor market report for February due on Friday afternoon.

EUR / USD extends its recent losses and has hit a fresh three-month low at 1.1913 so far. Incoming orders in German industry surprisingly rose significantly by 1.4 percent in a month-on-month comparison. Consensus analysts had expected an increase of only 0.8 percent, after a decline of 2.2 percent in December. Compared to the same month last year, incoming orders in January increased by 2.5 percent. Please also read the current EUR / USD news.

GBP / USD has so far been trading low at 1.3791 – a three-week low. The UK’s Halifax house price index, reported on Friday morning, fell 0.1 percent month-on-month in February, as consensus analysts expected, after falling 0.4 percent in January. Over the year, there is currently a price increase of 5.2 percent, after a previous increase of 5.4 percent. Please also note today’s GBP / USD news.

While USD / JPY continued its rally to a nine month high at 108.56, USD / CHF hit a seven and a half month high at 0.9311. Swiss foreign exchange reserves rose to CHF 914 billion in February (January: CHF 896 billion).

In addition to the eagerly awaited US labor market report for February, the US trade balance in January will also be reported on Friday afternoon. The details and other publications can be found in the economic data calendar.