It appears that the U.S. dollar was slipping into a state of relaxation this morning, this proceeding from a miraculous recovery and sustained growth last week after the Fed released its intentions concerning inflation. Many investors looked to the Fed Chairman for a bump in the right direction, but received no such lucky break.
The USD eased off its winning streak against major currencies today, and this was in contrast to the trouncing it gave groups such as the yen and pound.
Compared to the euro, USD lost about 0.4% and began to even out at $1.1909. It maintained its ground against the yen after having lost half a percent the previous day.
The Australian and New Zealand dollars backed off as well, and this was after breaking their winning streak from the previous week.
“We’ve had a bit of a positioning cleanout – the whole world was mega short the U.S. dollar, and that’s in good part probably been cleaned out already – and now we take a wee breath before the next move up,” a representative remarked on Tuesday.
“It’s suspected that the Aussie dollar could fall to around 74 cents, while the kiwi could likewise descend to near 68 cents, the rep said, “before they both might recover as the U.S. dollar charts a “raggedy” rise on the back of a strong U.S. pandemic recovery.”
Speaking more to the immediate future, many investors are closely watching he U.S. labor markets for any sign that forthcoming data might alleviate risk.
Chairman Powell spoke about how the labor markets will indeed have a bearing on his and the Fed’s decisions going forward.
On Monday, certain Fed officials such as St. Louis Fed President James Bullard and Dallas Fed President Robert Kaplan couldn’t be bothered to be so optimistic.
This certainly isn’t the end of this federal saga, and we’ve likely only seen the beginning of the fallout, MetaNews reporting. It appears that the U.S. dollar was slipping into a state of relaxation this morning.