The U.S. Dollar Index (USDIDX) continues to rise amid the latest macro readings. Claims came in above expectations, indicating a weaker labor market. Nevertheless, Neel Kashkari of the Minneapolis Fed was hawkish today on monetary policy and the situation in the US economy.
Fed Kashkari
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Create account Try a demo Download mobile app Download mobile app- Wage growth has eased somewhat and the labor market is strong. Inflation has fallen but is still well above target
- Inflation is quite stubborn. This means that the Fed will have to deal with it for a longer period of time
- If the markets are right that inflation will fall quickly, one would think that rates could normalize.But if high inflation turns out to be more entrenched, rates will have to stay high for longer
- I see no evidence of a collapse in consumer spending or a slowdown on the services side of the economy
- I am now more hawkish about the broader spectrum of Fed policy. The data are driving my expectations for monetary policy. I'm not convinced we've reached the maximum level of employment
- An inverted yield curve puts real pressure on banks. Turbulence in the sector could be a source of slowdown for the economy
- My guess is that once the period of high inflation is definitely over, we will return to an environment of low inflation and low rates.
On the subject of the debt ceiling, which has been weighing on sentiment around the USD lately, comments were made today by JP Morgan representatives including CEO, Jaimie Dimon who indicated that he does not expect a US bankruptcy and expressed confidence that the banking crisis will ease although commercial real estate lending could be a problem. The NY Fed Study supported Dimon's position, pointing out in the analysis that deposit outflows following the collapse of SVB remain limited to the largest regional banks. JP Morgan's head of analysis, Badrichani stressed that the bank does not see systemic risk in the market. In turn, Treasury Secretary Yellen commented that a U.S. default would so weaken the global and U.S. economies that it should be considered "unthinkable." Yellen also conveyed that the Biden administration has been discussingcUS investment restrictions in China - primarily in the high-tech sector.
The dollar index (USDIDIX) is climbing above the SMA200 and the SMA100 on the H4 interval is struggling to break above the declining trend line set from the October 2021 levels. The price has formed a strong support line near the psychological limit of 100 points. Source: xStation5
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