The Friday trading session saw the dollar price hold strong against the rest of the currencies. It was not just a typical session for the US dollar (USD) but a special one as it helped the greenback hit a new level.
The data from the market shows that the value of the USD kept on surging and it has managed to hit a 7-week high.
Inflation Rates are High
The dollar price has continued rising because the inflation rates are not coming down. To be precise, the inflation rates have not declined as much as the economists and the Feds had predicted.
With the inflation rates still being high, the Feds are not ready to lower the interest rate hikes. They may continue hiking the interest rates at the same level as they have done in recent months.
This is a strong indication that the dollar price would continue to move higher in the future. For now, it is a long-term prediction about the trading price of the dollar.
As long as the interest rates continue pumping, the dollar price will continued hiking. This would eventually pull the trading prices of other currencies against the greenback.
The dollar was strengthened as the inflation rates for the month of January came out to be 0.6%. Compared to the recorded inflation rates, the forecast that the Feds had expected was 0.3%.
As the Feds indicated what they intend to do, the investors started to pour money into the greenback. This resulted in the US dollar index being moved up by 0.6%. The price of the dollar has moved up to 105.20 against the major currencies.
Due to the recent push, the dollar price has hit a seven-week high. This is the highest weekly gain that the dollar has recorded in several months. The last time the dollar hit such a high level was back in September.
On the other hand, the trading price of the euro has recorded a huge decline. The euro has continued experiencing a downfall against the dollar and other major currencies.
The report shows that this is the lowest weekly trading level the price of the euro has hit since September.
The PCE price index that the Feds reported in the month of January was at 0.6%. However, in the month of December, the same index was at a low of 0.4%. The particular index has grown by 0.2% in a matter of a month.
Consumer Spending has Surged
Against the rising inflation rates, it was expected that consumer spending would witness a downtrend.
However, consumer spending surged in the same period when the inflation rates moved higher. This clearly means that consumers are still not much impacted by the rising inflation rates.
They have continued spending more, which goes to show that they are increasing their expenditures.
The particular index, which represents 2/3rd of the economic activity of the United States has been pumped by 1.8% in the month of January.
Home sales have also increased tremendously in the month of January. The report has shown that a 7.2% increase has been recorded in single-family homes in the United States.
The sales recorded were the highest since the month of March 2022.
Dollar Price against the Yen and other Currencies
The report shows that the trading price of the yen has recorded a demise against the greenback. The value of the dollar has surged to a two-month high versus the trading price of the yen.
The dollar price has surged by 1.3% against the yen, moving up to a high of 136.41 yen. The dollar has also recorded a significant surge against the trading price of the Swiss franc as well.
Against the franc, the trading price of the dollar has surged by 0.7%. It has moved down to 0.9406 francs versus the dollar.
The dollar has even surged against the euro and the sterling by 0.39% and 0.60% respectively.