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USD Drops Before Powell Speech, US Inflation Statistics


The USD dipped against the EUR ahead of Federal Reserve Chairman Jerome Powell’s speech later today. Will the currency continue last year’s story of strength or is there a new theme of dollar weakness in the air?

The US Dollar’s strength was a long-running theme in 2022, affecting the affordability of commodities like crude oil and gold while attracting investment in USD-linked assets like Treasuries. The Federal Reserve began to decrease the amount of its interest rate increases at the end last year. This caused recession fears to start to affect the currency. Although the US’s better-than-expected jobs data may have encouraged sentiment towards the USD, uncertainty and headwinds continue to impede the currency.

To begin with, there are weaknesses in the US’s key economic sectors such as manufacturing, which contracted for a second consecutive month in December. Inflation is another factor. While consumer and raw materials prices may have dropped towards the end, households and businesses still face high borrowing costs and high loan repayments.

Inflation rate in the USA

Thursday will see the release of the most recent US inflation rates readings. The core inflation for December stood at 6.1%, compared to 6 percent previously.

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