US Dollar Supported by FOMC


The U.S. dollar index is higher and remains in a 13-day congestion pattern.

The fundamentals and technicals remain supportive to the U.S. dollar.

The inflation rate in the euro area declined to 2.8% year-on-year in January 2024 from 2.9% in the previous month, which was in line with market expectations, However, the core rate, which excludes volatile food and energy prices, ease to 3.3%, which was above predictions of 3.2%.

The Bank of England left its key interest rate unchanged at 5.25% but signaled it is likely to lower borrowing costs this year, although probably not as soon as traders expect. BOE Governor Bailey said, “We are not yet at point where we can lower rates.”


Stock index futures declined yesterday afternoon when the Federal Open Market Committee’s statement and Fed Chair Powell’s comments indicated the FOMC will be slow to lower its fed funds rate.

Fed Chair Powell said it will be appropriate to start cutting rates at some point this year, although he did not think a March cut is likely. As expected, the Fed kept its fed funds rate unchanged at 5.25% – 5.50%.

U.S. based employers announced plans to cut 82,307 jobs in January 2024, which is the most in ten months, This compared to 34,817 in December 2023, according to Challenger, Gray & Christmas, Inc.

Jobless claims in the week ended January 27 were 224,000 when 214,000 were anticipated.

Nonfarm productivity on an annualized basis in the fourth quarter was up 3.2% when an increase of 2.3% was predicted, and unit labor costs were up 0.5% when a gain of 2.1% was estimated.

The 8:45 central time January manufacturing PMI is anticipated to be 50.3.

The 9:00 January Institute for Supply Management manufacturing index is expected to be 47.4.

The 9:00 December construction spending report is anticipated to show a 0.5% increase.

The fundamentals and technicals remain supportive to stock index futures.


Futures are mostly higher, especially at the long end of the curve.

Financial futures markets are predicting there is a 37% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the March 20 meeting and a 63% chance that the Fed will keep rates unchanged.


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