We are waiting for some important data from the US economy today, represented by growth data, and we are also waiting for the most important news tomorrow, which is the Personal Consumption Expenditures index, which is the Fed's preferred indicator for measuring inflation.
But the US dollar gained some strength during this week's trading, especially today after the statements of Christopher Waller, a member of the Federal Reserve yesterday evening, where he said that the recent weak inflation data supports the reluctance of the Federal Reserve to lower the rate target in the near term, and the US Federal Reserve may need to maintain the current high interest rate for a longer period than expected.
This is one of the factors that has contributed to the dollar's rise so far today, But there are also many other reasons that led to the decline of other major currencies, which inadvertently helped support the dollar.
- Euro : the euro is still witnessing rather weak economic data with strong expectations that the ECB will cut the interest rate around June, which the markets are pricing strongly at the moment.
-JPY : the yen is facing difficulties after the decision of the Central Bank of Japan, despite Tokyo's efforts to try to stop the bleeding.
- CHF : The Swiss central bank is leading the interest rate reduction race, which it started last week by reducing the interest rate from 1.75% to 1.50%, thus becoming the first major major banks around the world to start such a step.
- CAD : the Canadian currency is also not doing much better due to weak inflation figures, and we may see the Bank of Canada acting faster and cutting interest.
- AUD & NZD : they are drifting into the mud due to the decline of the Chinese yuan this week.
All this has led to the dominance of the US dollar at the moment, despite expectations that the Fed will also start cutting interest rates next June, but when compared with other major currencies, we find that the US dollar is the best of the bad.
Or, as they say, it is the cleanest shirt among dirty laundry.
