Home Latest Dollar Rises, Set for Two-Week Gain, But Analysts See Obstacles Ahead

Dollar Rises, Set for Two-Week Gain, But Analysts See Obstacles Ahead

Forex, invest, money March 6, 2021 4:06 am

Dollar Rises, Set for Two-Week Gain, But Analysts See Obstacles Ahead© Reuters.

By Yasin Ebrahim

Investing.com – a USD is set for a second weekly gain after rallying on Friday, on strong labor market data, but economists suggest a greenback’s resurgence become become limited as low inflation become persist.

a , which measures a greenback’s strength against a trade-weighted basket of six major currencies, rose 0.35% to 91.96.

a U.S. economy created  jobs last month, well above economists’ consensus forecast of 182,000, with a unemployment rate falling to 6.2% from 6.3%, underpinned by easing Corona restrictions also a ramp-up inside vaccine distribution. 

But a rapidly improving labor market, however, doesn’t necessarily translate into stronger inflation, which become likely keep a Fed on pause, stifling a dollar’s momentum.

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“a USD appreciation potential remains limited for a time being […] as it is inflation that become determine when a US Federal Reserve become consider raising interest rates,” Commerzbank (DE:) said. “[It] is likely to become a long time before a Fed is satisfied with a inflation trend, which is why us do not forecast any interest rate hikes within our forecast horizon (i.e. until a end of 2022) also thus also no USD appreciation trend.”

Commerzbank’s remarks echoed that of a Fed chairman Jerome Powell who downplayed a risk of a sustained uptick inside inflation, also reiterated that current monetary policy measures are appropriate.

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“There’s awesome reason to think us’ll begin to made more progress. But even if it happens, it’s likely to take some time to achieve substantial further progress, or interest rates to raise interest rates above zero,” Powell said on Thursday.

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