Nov 08, 2023

The US dollar has risen against the world’s currencies for a second day. Still, a speech from Chair Powell on Wednesday will determine the following path. 

DXY-Daily-ChartDXY – Daily Chart

Friday saw a sharp selling in the DXY and a surge in major currencies such as the euro and yen. This week has started with a two-day bounce, but that can still be a minor correction ahead of further lows.

Federal Reserve Chairman Jerome Powell will speak on Wednesday, which could give investors reason to drive the subsequent path of the US dollar. Another Fed policymaker, Reserve Bank of Minneapolis President Neel Kashkari, said on Monday that the central bank has more work to do on inflation. 

“The economy has proved to be really resilient even though we’ve raised interest rates a lot over the past couple of years. That’s good news,” Kashkari said. 

“We haven’t completely solved the inflation problem. We still have more work ahead of us to get it done.” 

Fed officials seemed happy that the rise in treasury yields had helped them to contain borrowing and hold inflation down, but yields have now dropped from nearly 5% to 4.59%. If they fall further, the next Fed meeting could see a further talk of interest rate hikes.  

The Powell speech is scheduled for around 10:15 pm HKT, and traders can capitalise ahead of Thursday’s session and into the end of the week.

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