empty
08.04.2024 02:27 PM
US dollar enjoys gains

The net long dollar position increased by another $2.4 billion over the reporting week, totaling $16.1 billion, showing confidently bullish positioning. The dollar gained mainly against the euro and the yen, with minor repositioning against other currencies.

The increase in the long dollar position is logical and easily explained: the more the market doubts that the Fed will begin to cut rates, the longer the dollar will remain in a high-rate environment, the higher its yield relative to other currencies, and therefore, the higher the demand for the dollar.

This image is no longer relevant

The US labor market report also came with surprises. Data showed that the market added 303,000 nonfarm payroll jobs in March, significantly more than both the 200,000 expected by economists and the historical average of 190,000. The report also showed that the average hourly earnings increased by 0.3% month-on-month, indicating accelerated wage growth, which causes inflation-related concern among Fed policymakers. Fed representatives Logan and Bowman described the current situation almost identically, saying that inflation progress has stalled. Yes, the inflation situation is rather complicated, but such reports favorably affect the dollar, enhancing its bullish prospects.

During Easter celebrations, Fed Chair Jerome Powell signaled that strong data make it possible to postpone the rate cut cycle to gain more confidence in inflation cooling. The yield on TIPS bonds, an excellent indicator of inflation expectations, is rising. In December, it dropped to 2.06%, while on Friday, the indicator rose to a more than five-month high of 2.45%.

This image is no longer relevant

In addition to jobs data, other reports were quite optimistic. The US Manufacturing ISM was significantly above expectations in March, indicating the start of production expansion for the first time since 2022. US consumption expanded by 0.4% in February, and the Services ISM in March slightly decreased from February but remained in growth territory.

Positive data acts as a driving force behind the US dollar's rally amidst changing forecasts for the Fed's rate. If at the beginning of last week, investors leaned towards the first rate cut occurring in June with a total of 3 cuts in 2024, by the end of the week, expectations for the first cut were evenly split between June and July.

This indicates that the dollar looks more than confident compared to its competitors. There is virtually no reason for selling it, except for one factor - a rise in gold prices, which may indicate an overall increase in demand for safe-haven assets in anticipation of a global slowdown.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

AUD/USD. Analysis and Forecast

At the beginning of the new trading week, the AUD/USD pair is showing steady upward momentum, recovering from a slight pullback and once again approaching the highs seen in November

Irina Yanina 14:51 2025-06-09 UTC+2

USD/JPY. Analysis and Forecast

The USD/JPY pair is showing moderate weakness on Monday, dropping toward the psychological level of 144.00. The decline is driven by a combination of factors, including the strengthening

Irina Yanina 14:05 2025-06-09 UTC+2

WTI - West Texas Intermediate. Analysis and Forecast

At the start of the new week, prices for West Texas Intermediate (WTI) crude oil are attempting to stay near Friday's highs. Senior U.S. officials, including Treasury Secretary Scott Bessent

Irina Yanina 14:02 2025-06-09 UTC+2

Old Donald the Fighter Seems to Have Broken Down (there is a likelihood of continued growth in CFD contracts #NDX and #SPX)

Despite all the hardships, uncertainty, and overall market tension, stock indices persistently climb higher. Investors believe that Donald Trump will have to back down and retreat in his confrontation with

Pati Gani 10:06 2025-06-09 UTC+2

China and the U.S. Take a Serious Step Toward Each Other

The euro and the pound have recovered from Friday's losses, gradually resuming their upward movement. This is supported by the resumption of U.S.-China negotiations today, aiming to further ease tensions

Jakub Novak 09:21 2025-06-09 UTC+2

What to Pay Attention to on June 9? A Breakdown of Fundamental Events for Beginners

No macroeconomic reports are scheduled for Monday. Thus, traders will have nothing to react to during the day. There is a high probability of flat or weak movements unless Donald

Paolo Greco 05:54 2025-06-09 UTC+2

GBP/USD Overview – June 9: Nonfarms Did Not Disappoint

The GBP/USD currency pair also traded lower on Friday and even settled slightly below the moving average line. While we constantly say there are no reasons for the pound

Paolo Greco 04:03 2025-06-09 UTC+2

EUR/USD Overview – June 9: A New Episode of the "American Circus"

The EUR/USD currency pair traded with a slight decline on Friday, which was driven by decent macroeconomic data from the U.S. However, reports from the Eurozone also turned out quite

Paolo Greco 04:03 2025-06-09 UTC+2

EUR/USD. Weekly Preview. Inflation and More Inflation

The upcoming trading week will revolve around American inflation. In the United States, data will be published on the growth of the Consumer Price Index (CPI), the Producer Price Index

Irina Manzenko 02:39 2025-06-09 UTC+2

U.S. Dollar: Weekly Preview

In the United States, as usual, there will be far more interesting events and news than in the Eurozone or the United Kingdom. Economic data will start arriving on Wednesday

Chin Zhao 00:55 2025-06-09 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.