The US dollar regains dominance once again, while US stocks await corporate results.

The Federal Reserve refrains from interest rate cuts in March based on market data.

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Federal

The US Dollar

US Stocks

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The Federal Reserve kept the federal funds rate unchanged at its highest level in 23 years,
ranging between 5.25% and 5.5%, for the fourth consecutive meeting in January 2024, in line with expectations.
Policymakers added that it would not be appropriate to cut interest rates until they have greater confidence that inflation is sustainably moving toward 2%.
During the press conference, Chairman Powell stated that it would be appropriate to begin interest rate cuts at some point this year,
but the central bank would continue to make decisions on a meeting-by-meeting basis and did not consider a cut in March likely.
Meanwhile, the Federal Reserve removed the signal for further interest rate hikes from its statement,
stating that the risks to achieving employment and inflation goals are moving toward a better balance.
However, it indicated readiness to adjust the monetary policy stance as needed if risks hinder the achievement of these goals.
The central bank noted that inflation had eased over the past year but remains elevated.

The US Dollar

The US Dollar Index has returned to its dominance against a basket of major currencies,
following diminished expectations that the Federal Reserve would start cutting interest rates in the coming March.
It remains committed to returning inflation to the target level of 2%.

Statements from the more hawkish Federal Reserve officials have strengthened the upward momentum of the US dollar,
with markets now seeing a 62% chance that the Fed will keep interest rates unchanged,
according to the CME Group’s Fed Funds Rate futures tool.
As a result, the dollar index rose by 0.24% to 103.66 points, leading to declines in other major currency pairs.

US Stocks

Decline Amid Investors’ Anticipation of Corporate Results.

US stock indices fell after Federal Reserve Chairman Jerome Powell stated that inflation remains higher
than the US Federal Reserve’s target and hinted that it may not be appropriate to decide on an interest rate cut starting from the March meeting.
This raised market expectations of the Fed keeping interest rates for a longer period than anticipated.
However, investors are eagerly awaiting corporate results, given the presence of a strong consumer according to the latest data on the US Consumer Confidence Index. Strong company results are expected at a time when markets are reaching historical highs.

It is important to monitor market data on Friday, which is expected to have a strong impact on the movements of the US dollar and stocks as well.
Expectations indicate the addition of only 175,000 jobs in January,
lower than the previous month’s 216,000 jobs, and the unemployment rate is expected to remain unchanged at 3.7%.
It is worth noting that in case of readings higher than employment expectations and an unemployment rate below 4.0%,
it will be positive for the dollar and negative for stocks, as interest rates are expected to remain high for an extended period.

The US dollar regains dominance once again

The US dollar regains dominance once again

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