fbpx
17.3 C
London
Tuesday, October 19, 2021

Dollar Value Increases As U.S Federal Reserve Improves

In a major win for the American economy, the U.S Federal Reserve announced that the economy was improving and that its tolerance for higher inflation has increased in statements given out on Thursday. Following the statements, the U.S dollar’s value increased against some major global currencies. 

During the meeting, federal authorities promised to maintain a zero rate until 2023, which is the year that the market will reach “maximum employment”, as per economists. 

- Advertisement -

Given that the U.S Federal Reserve is doing well, experts also expressed positivity over improving the American economy, which has been hit hard by the COVID-19 pandemic. 

The dollar index increased against 6 major global currencies at 0.32 percent to trade at 93.493. It also stands at 1.1763 against the euro. 

U.S Federal Reserve Shows Signs Of Improvement After COVID-19 Slump

Initially, the American dollar value decreased after an expected weak U.S retail sales were announced. However, it grew back quickly after Jerome Powell commented on the improving U.S Federal Reserve. 

- Advertisement -

After the comment, the U.S treasury yield increased dramatically overnight by 0.7 percent. Mitsuo Imaizumi, a strategist from Daiwa Securities compared this increase with the Jack Hole Symposium. 

Imaizumi said that the market reacted the same way after Jerome Powell revealed a fresh framework back in August. The U.S Treasury yield increased dramatically after last month’s announcement as well. 

Experts believe that more financial stimulus needs to be given to the market in order to maintain and increase economic activities. 

Another strategist from Barclays said that since the November presidential elections are closing in, the U.S Federal Reserve and the economy will be a major point of focus. Besides, the stimulus negotiations are still underway in Congress. He further mentioned that the marketers are all eyeing how the talks would turn. 

Among the Asian currencies, the Australian dollar increased slightly, and for a brief period of time, after strong data on jobs was released. However, it decreased back again after the dollar value swamped all major currencies. It was trading at 0.53 percent. Now, it has fallen to 0.72665 percent.  

Japan, New Zealand, Britain Amongst Falling Currencies 

On Thursday, the Bank of Japan also reported that Japan’s economy is in a critical condition. However, they believe that it will improve without any immediate stimulus package in the near future. This decision comes right as Yoshihide Suga takes on the role of Japan’s current Prime Minister. Marketers are now waiting to see how the new administration will handle monetary policies. 

Unlike the U.S Federal Reserve, the British Pound’s value still majorly depends on the Brexit plans. The British politics have been turbulent recently with reports of rebellion within the Prime Minister’s Own Party. The pound dropped 3.5 percent and stands at $ 1.2932. 

It has been reported that the English government will pump out some stimulus money to reinvigorate economic activities in the country, which has been severely affected by the COVID-19 pandemic. 

New Zealand, on the other hand, does not share the same news as the U.S Federal Reserve. The kiwi currently trades at $0.6690.

- Advertisement -

Follow Us

16,985FansLike
4,865FollowersFollow
1,643FollowersFollow

Latest news