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Dovish Statement Bumps USDIndex


USDIndex Daily

Due to Fed Chair Powell’sdovish comments, the US dollar index dropped to a nine-month low. This caused bond yields to tumble and sparked a rally that dampened demand for the dollar. The index lost -0.89% in yesterday’s trading.

The US 10-year Treasury yield fell to 3.39% on Wednesday, approaching a low not seen since April last year, as investors digested the latest FOMC statement and the Fed Chair’s comments. Officials now believe that inflation is decreasing slightly, but the FOMC language seemed more dovish.

The FOMC, as expected, raised the Fed’s funds target range by 25 bps to 4.50%-4.75% and said inflation had eased somewhat but remained high and “sustained” rate hikes would be appropriate. Fed Chair Powell indicated that inflation remains high above the long term goal, and that tightening is necessary for some time to bring inflation down to the 2% target. However, he said that the disinflationary process had begun, indicating that the Fed’s aggressive pace of rate hikes had begun to wane.

The Dollar was affected by weaker US economic news than anticipated. Jan’s ADP The number of job changes rose +106k, Expectedly weaker than expected +180k And the smallest gain in two…

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