Forex News

US Dollar Rebounds on Strong Q4 Economic Indicators, Ends Pound’s Streak



 

The US dollar, which had been weakening due to anticipated rate cuts in the midst of peak long-dated rates, rebounded on Thursday, driven by robust economic indicators. The Q4 Consumer Price Index (CPI) annualized at 3.79%, as reported by the Cleveland Fed’s nowcast, played a significant role in this turnaround.

This shift in strength ended the British pound’s six-day winning streak against the USD. The strong indicators also led to an increase in US 10-year yields by 6.7% to 4.66%. This surge wiped out the gains that the cable (GBP/USD exchange rate) had seen earlier in the week on Tuesday and Wednesday.

The anticipation of rate cuts had initially led to a weakening of the US dollar. However, the release of strong Q4 CPI data triggered a reversal in this trend, demonstrating the sensitivity of currency markets to macroeconomic indicators. The rise in US 10-year yields further underscores this point, highlighting the interconnectedness of global financial markets.

While the pound had been performing well against the USD for nearly a week, this run was halted by the robust performance of the US dollar. This serves as a reminder of the volatility inherent in currency exchange rates and their susceptibility to shifts in economic indicators and market sentiment.

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