The US dollar is Recovering after the Federal Reserve’s blow

The US dollar is Recovering after the Federal Reserve’s blow: The greenback is trying to recover from the losses of the previous session
it incurred following the negative developments of the Federal Reserve meeting.
In this regard, the dollar suffered strong daily losses at the end of yesterday’s session,
estimated at 0.43%, affected by the less hawkish statements made by the US Federal Reserve Chairman Powell last night,
as he said that delaying the interest rate cut step could harm the US economy,
Expect the interest rate cut cycle to begin in the second half of this year,
with hints that despite the strong labour market conditions and the outstanding performance of the US economy,
this will not prevent the Federal Reserve from taking an interest rate cut action.


Release of Economic Forecasts



Release of Economic Forecasts

This coincided with the pressures the dollar faced at that time immediately
after the release of the economic forecasts by the Federal Reserve,
which indicated the possibility of three US interest rate cuts this year,
The Federal Reserve did not consider the rise in inflation rate during the past two months.
It should be noted that markets now see a 65% chance that the US Federal Reserve
will start cutting interest rates at the June meeting,
according to the Federal interest rate tracking performance issued by the CME Group.

Regarding the US dollar movements in the main currency market today,
it is noted that the dollar is trying to recover from the sharp losses
it witnessed in yesterday’s trading, supported by several factors,
which can be addressed in the following points:

1- Market optimism about the recovery of economic conditions in the United States

The economic forecasts of the US Federal Reserve revealed an increase in its estimates
for economic growth during the years 2024, 2025, and 2026 to 2.1%, 2%, and 2% respectively,
after the previous Federal Bank forecasts indicated that the economic growth of
about 1.4%, 1.8%, and 1.9% in 2024, 2025, and 2026 respectively,
which raised investors’ optimism about the strength of the economic conditions in the United States,
Therefore, the demand for the dollar clearly recovered during the transactions.


2- The strong decline of the euro in today’s trading

The decline of the euro or the unified European currency supported the dollar’s movements
in trading after recent data revealed the continued contraction of the manufacturing sector in France, Germany,
and the eurozone at a pace that exceeded market expectations,
which fueled traders’ concerns about the reflection of the economic growth of the region’s countries,
which enhanced the dollar-buying operations in transactions.


Based on these positive factors, the dollar index
(which measures the performance of the green currency against a basket of major currencies, including the euro)
0.09%, a record of about 103.47 points.


The US dollar is Recovering after the Federal Reserve’s blow.

Crucial day for the markets interest rate extension or rapid cut this year

Crucial day for the market interest rate extension or rapid cut this year: The markets have recently witnessed many important data,
most notably the decline in annual personal consumption expenditures from 2.9% to 2.8% levels,
a clear indication that US inflation is indeed resuming its sustainable decline.



US labour market data
Transactions next week

US labour market data

The most important thing now is what about the US labour market data
and how monetary policymakers in the United States of America view it
During last week’s transactions ending,
we witnessed a discrepancy in US employment numbers, as employment in the non-agricultural private sector registered positive,
with 275,000 jobs being provided, contrary to expectations at the time that indicated the addition of only 190,000 jobs.
As for the unemployment rate, it rose to levels of 3.9%, contrary to expectations that indicated the addition of 190,000 jobs.

Variation and stability were around 3.7%, while we witnessed a decline in the hourly wage growth rate from 0.6% to 0.1%.

Transactions next week

During next week’s transactions, specifically during Wednesday’s transactions, March 20 of this month,
we will have an appointment from monetary policymakers in which the US Bank is expected to keep interest rates unchanged,
but the most important question now is when the US Federal Reserve will start reducing interest rates, and more importantly
How do you view the labour market numbers?
The monetary policy statement issued by the bank will have an important role in answering many investors’ questions,
as Jerome Powell and his Federal Committee presented a hawkish tone.
This may contribute to the recovery of the US dollar index,
we may then witness deep corrections in the US stock indices,
and vice versa if the bank presents an interest rate reduction path for the year.
Directing investors that the bank may actually offer a three-fold reduction in the high interest rate of 5.5% at that time.
This will contribute to a positive revival of the US stock indices, and in return, we may see clear negativity for the dollar index.
Drawing attention to the importance of the new numbers that the bank
will present the economic forecasts of the Monetary Policy Committee for the open market.



Crucial day for the market interest rate extension or rapid cut this year

US stock indices Fate Regarding the anticipated labour market data

 US stock indices Fate Regarding the anticipated labour market data: Markets await numerous US labour market data releases during the current week,
representing the second most important factor for the US Federal Reserve after inflation data, which showed a negative reading of about 2.8% last week.



Significance of labour market data

Expert predictions

labour market data


Significance of labour market data:

The Significance of labour market data comes from previous statements from Fed members
indicated that the bank is not compelled to early interest rate cuts amidst improved labour market data,
contributing to the US economy’s ability to achieve growth in line with declining inflation,
which is encouraging for the US Federal Reserve’s monetary policy committee.


Expert predictions:

Experts expect a decline and negativity in labour market data to be released during trading on Friday, March 8th,
where forecasts suggest unemployment rates to remain unchanged at around 3.7%.
As for employment in the non-farm private sector, a decline to only 190,000 jobs is expected,
while the previous reading was around 320,000 jobs.
There are also negative expectations regarding wages,
with a forecast of a 0.4% decrease compared to the last reading of about 0.6%.
This has led investors to raise expectations
for the start of interest rate cuts during the upcoming May meeting due to the decline in US inflation.



labour market data

Now, all eyes are on labour market data, as a decline and weakness in the US labour market,
a driving force that could indeed prompt the Federal Reserve to cut US interest rates early this year,
may enhance the gains of US stock indices and maintain their positive momentum.
However, suppose the upcoming labour market data contradicts expectations and shows further positivity.
We might witness the opposite in that case, with major US stock indices correcting.
At that point, there could be a possibility of a decline in investors’ bets regarding the May rate cut,
which may contribute to lowering the expectations of the US bank during its upcoming meeting.



US stock indices Fate Regarding the anticipated labour market data

The US dollar asserts its dominance over major currencies as markets price in policy divergence

The US dollar asserts its dominance over major currencies as markets price in policy divergence:
The dollar index fell to around 104.6 on Thursday
after investors’ expectations of a nearly 44% rate cut by the Federal Reserve Bank in May diminished,
according to market pricing.


Inflation Data

European Union




Inflation Data

This decline marks a sharp decrease since the beginning of February
when a rate cut by that time was seen as certain,
influenced by strong inflation data and recent comments from central bank officials.

Data on Tuesday showed that the core inflation rate fell to 3.1% in January from 3.4% in December,
but it came in higher than expectations of 2.9%.
The core inflation rate remained unchanged at 3.9%, defying expectations of a slowdown to 3.7%.

Markets are not currently anticipating a rate cut by the Federal Reserve
in March and the likelihood of action in May has been reduced.
Meanwhile, Chicago Federal Reserve President Austan Goolsbee said on Wednesday
that the central bank should be cautious about waiting too long before lowering interest rates.
Federal Reserve Vice Chairman for Supervision Michael Barr also said
that the latest inflation data suggests a clear path toward the 2% inflation target.
Investors are now looking to January retail sales and weekly jobless claims figures on Thursday.


European Union

On the other hand, the European Commission stated that the European Union’s
economy entered 2024 weaker than expected and lowered
its growth forecast for this year by 0.4 percentage points to 0.8% in the euro area.
After narrowly avoiding a technical recession in the second half of last year,
the prospects for the first quarter of this year remain weak, according to economic forecasts for winter 2024.

Forecasts suggest that the European Central Bank, like other major central banks,
will be more stimulative than the US Federal Reserve.
According to Ippek Ozkardeskaya,
senior analyst at Swissquote Bank, markets are currently expecting
more interest rate cuts by the European Central Bank than those made
by the Federal Reserve this year, supporting the strength of the dollar against the euro.
She states, “In this way, the decline in the value of the euro against
the US dollar remains well-supported by fundamentals.”
However, the hawkish shift from the Federal Reserve and the strength

of the US dollar could alleviate the European Central Bank’s dovish
stance and put a brake on euro-selling operations against the US dollar

Do US consumer prices contribute to supporting the position of the US Federal Reserve

Do US consumer prices contribute to supporting the position of the US Federal Reserve:
The US Federal Reserve has convinced investors to rule out a cut during next March
in light of the uncertainty of an actual decline in the inflation trend,
which fell to its lowest level of around 2.9%.
However, Federal Reserve Governor Jerome Powell clarified that the last six readings
were not sufficient to confirm the trend of inflation towards decline.
At the same time, the US Bank fears an early cut in interest rates
before inflation reaches the target of around 2%.
At that time, inflation may stabilize at high levels and far beyond the specified target.
In return, it fears that it will keep US interest rates high for a long period for fear of





The importance of upcoming economic data



During this week, and specifically tomorrow, Tuesday,
we are looking forward to the US consumer price data,
which reflects more closely and proactively the actual inflation prices,
which the US Federal Reserve looks at in the report on monetary policy,
and as Powell explained while responding to journalists’ questions,
the bank is also looking forward to the consumer price data
and gives it importance because it reflects inflation.
Economists expect annual consumer prices to decline from levels of 3.4%,
which was the previous reading, which was positive at the time.
Expectations for the next reading are negative, around 2.9%.

Expectations also indicate a decline in monthly consumer prices from 0.3% to 0.2%,
and concerning consumer prices

The basic reading is expected by experts to vary and stabilize
as the previous reading was around 0.3% without change




The importance of upcoming economic data

The upcoming data is important for investors, as providing an actual reading
indicating a decline in US inflation will support the issue of inflation continuing
in the context of decline and approaching the US Federal Reserve’s target of around 2.0%,
which will move the Fed to begin the process of reducing interest rates,
which promises the markets a reduction three times during the current year, and in return.
It also exists in light of the labour market data, which may add inflationary pressures,
and at that time we may see a reading higher than expected,
and it will certainly be better if the reading is higher than the previous reading,
which was already positive.
Then this will mean that the US Federal Reserve will have to wait more time,
which is what the mechanism is looking forward to.
All eyes are now on the Fed reducing interest rates next May,
with fears that the extended interest rate period will extend.


Do US consumer prices contribute to supporting the position of the US Federal Reserve?

Oil records its first monthly gain

Oil records its first monthly gain: For the first time in months, we are witnessing a rise in oil prices due to tensions in the Red Sea.
US crude futures contracts recorded an increase of 1% during January.



Canadian consumer prices

Oil records its first monthly gains

The US Federal Reserve 





Canadian consumer prices provided a reading that reinforces the continued Canadian monetary tightening

Yesterday, Canadian consumer price data showed clear positivity,
contrary to expectations that indicated a provision of only 0.2%,
adding a further rise and presenting 0.3%, and as it is a higher reading than expectations,
it is also higher than the reading that preceded it, which was around 0.1%.

This reinforced the positive pricing of the Canadian dollar at that time,
as the receipt of data related to increases that may occur in Canadian inflation
may contribute to maintaining Canadian interest rates for an extended period.
It is worth noting that the return of Canadian inflation to the rise may support further monetary tightening by the Bank of Canada.


Oil records its first monthly gains in three months due to the Red Sea crisis


Oil prices witnessed their first monthly rise since September, due to the impact of attacks on ships in the Red Sea,
which changed tanker routes and escalated tensions in the Middle East. US crude futures rose approximately 6% during January,
despite falling at the end of the week.

Traders are awaiting President Joe Biden’s reaction to the attack attributed to Iranian-backed militants
that resulted in the killing of three American soldiers last week.
However, the conflict has not affected oil supplies so far, limiting the extent to which market prices can rise.

Although oil prices moved in a narrow range during January due to potential war fears,
they remained limited due to concerns about supply and demand. US production reached a new record high of 13.3 million barrels per day,
according to data released on Wednesday. Production increases from the Americas are expected to offset global demand growth this year,
according to the International Energy Agency.

In another context, US inventory data, released on Wednesday, showed mixed reports,
as inventories at the main storage centre in Cushing, Oklahoma, fell to the lowest level since November while witnessing fluctuations in demand for gasoline.



The US Federal Reserve ruled out a cut in March and awaits upcoming data

US Federal Reserve Governor Jerome Powell explained during the press conference following the monetary policy statement,
during which US monetary policymakers decided to hold the interest rate unchanged at around 5.5%,
the necessity of waiting for continued declines in US inflation before actually starting to reduce US interest rates,
as The situation is not clear for monetary policymakers and the biggest fear is that the strong labour market will add new inflationary pressures,
so there may not be enough time for the March meeting to evaluate the data, which may prolong the period of keeping rates unchanged


Oil records its first monthly gain: