The US dollar gained strength on Thursday as investors responded positively to President Trump's reassurance that he is unlikely to dismiss Federal Reserve Chair Jerome Powell. This reassurance provided a calming effect on the markets following prior speculation about Powell's position. Although Trump continued to criticize Powell, his less confrontational approach restored some market confidence. Mixed signals from recent inflation data are now influencing attention towards potential Federal Reserve actions, while Treasury yields have risen due to ongoing inflation concerns.
The US dollar strengthened on Thursday due to President Trump's clarification that he is "highly unlikely" to dismiss Federal Reserve Chair Jerome Powell. This statement calmed markets after intense speculation, restoring some confidence.
Despite Trump's ongoing criticism of Powell, the retreat from a confrontational stance has helped the dollar recover. Market focus now shifts to the Fed's actions in light of mixed inflation data.
CPI data showed an increase, although softer than expected, while PPI data declined. Treasury yields rose across the curve due to inflation concerns and political tensions.
Markets are awaiting retail sales data, where strong figures could support expectations of stable interest rates, while weak numbers may prompt calls for aggressive easing and negatively impact the dollar and yields.
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