DXY: the dollar continues to rise
As follows from the minutes of the July meeting published last Wednesday, Fed leaders agreed on the advisability of raising interest rates by 75 basis points. Regarding future increases, they decided that it "will depend on the information coming in." It is also possible that at some stage "it would be appropriate to slow down the pace." Nevertheless, the published minutes confirmed the intention of the Fed's leadership to decisively fight inflation, including by consistently tightening monetary policy. And this is an argument in favor of further strengthening of the dollar, which also testifies to the tightening (read, deterioration) of monetary conditions for American business.
Whenever the Fed has raised interest rates this year, its leaders have said that the US economy and labor market are in good shape and will withstand further rate hikes. However, the picture is not entirely clear, and the current situation in the US and global economies cannot be called normal against the backdrop of a sharp rise in energy prices, inflation and geopolitical tensions in the world.
Meanwhile, the deterioration of market sentiment at the beginning of the week gives the dollar a new impetus to growth, and stock indices - to decline.
Thus, the US dollar index, which rose by more than 2% last week, having also broken through another local resistance level 108.00, continues to grow at the beginning of the week, having reached a new local maximum of 108.41 by the time this article was published.
Now, as we noted earlier, after the breakdown of the local multi-month high of 109.14, reached in mid-July, the mark of 110.00 will become the next upside target for DXY.
The annual economic symposium in Jackson Hole, Wyoming, organized and sponsored by the Fed, begins Thursday. Probably, the statements made by the head of the Federal Reserve Powell at this forum will confirm the tough intentions of the leadership of the American central bank to overcome high inflation, which will further strengthen the dollar.
Important macroeconomic indicators will be published tomorrow, and today the only more or less important publication (at 12:30 GMT) will be the National Activity Index from the Chicago Fed, which assesses economic activity in general, as well as inflationary risks.