Things to watch out for on Wednesday, February 8:
The US dollar ended the day with a mixed behavior in the currency market. The US currency extended its February rally through the first half of the day, but gave ground fitfully in the latest trading session as US Federal Reserve Chairman Jerome Powell engaged in a moderated debate in the Economic Club of Washington DC.
Federal Reserve Chairman Jerome Powell , began by repeating his hawkish message, saying they would probably have to raise interest rates further, adding that the process is going to be “bumpy.” The market welcomed the sentiment conveyed by Powell that stronger than expected data will cause the Fed to hike rates accordingly. In immediate reaction, the dollar fell and Wall Street soared. However, Powell added that if the labor market data is encouraging, or if higher inflation is reported, the Fed will raise rates more than expected.
The dollar rallied as values fell to fresh daily lows, but then reversed course again, ending the day with significant gains.
The euro was the dollar’s weakest rival, and the pair ended the day around 1.0710. The head of monetary policy of the European Central Bank (ECB) chief Joachim Nagel stated that ECB rate cuts are not on the agenda for the foreseeable future and noted that central bank rates are not yet restrictive. He added that “more significant” increases are needed. On the other hand, Isabel Schnabel, member of the Executive Committee of the ECB, stated that her intention is to raise rates 50 basis points in March.
The GBP/USD pair struggled to hold the 1.2000 level, after falling to a fresh multi-week low of 1.1960.
The AUD/USD settled around 0.6940, helped by the Reserve Bank of Australia. The RBA delivered a hawkish message by raising rates by 25 basis points. Large Wall Street gains provided additional support.
The USD/CAD pair is trading around 1.3410. He governor of the Bank of Canada, Tiff Macklem, declared on Tuesday that further rate hikes will not be necessary if, as expected, the economy stagnates and inflation declines.
USD/JPY finally closed the gap to the weekly open, and is currently trading at 131.20.
Gold failed to attract investors and consolidate in the $1,860/$70 price zone.
Crude oil prices benefited from the rally on Wall Street, with WTI ending the day at $77.30 a barrel.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.