The concept of declining returns and its importance in the economy, then focusing on how this decline affects the local currency. It is known that declining revenues reflect weakness in the economy, and this directly affects the value of the local currency. Declining yields typically reduce demand for the local currency by foreign investors, causing its value to decline against foreign currencies.
Regarding the market, you can highlight the impact of the monthly jobs report on the performance of the local currency and the exchange market. This report is among most important economic reports that greatly affect the movement of financial markets, especially the currency market.
The monthly jobs report can have a significant impact on currency market trends, as it can lead to sharp fluctuations in the value of local currency based on data announced in the report, such as the unemployment rate and the number of jobs added or lost.
It is important to point out the effects of these factors on the country’s monetary and economic policies, and how investors must be careful and closely follow these developments to make appropriate decisions in currency trading.
Sure, you can explain more aspects and details about these issues in your article, which helps readers understand the full impact of those factors on financial markets and local currency.
current rise in US dollar levels is facing restrictions and challenges, partly due to the negative pressure caused by the decline in the yield on 10-year US Treasury bonds. This decline reflects expectations about the future interest rates of the Federal Reserve, which is a major factor affecting the strength and direction of the US dollar.
Analysis of the price of the American index indicates an expected scenario of continuing to hold above the 38.2% Fibonacci retracement level at 105.10
Future of Federal Reserve interest rates
It is important to wait for more evidence about the future of the Federal Reserve’s interest rates to better understand the future direction of the US dollar. Tomorrow’s monthly jobs report is one such piece of evidence, as it will show the extent to which US economic and labor market conditions are affected by existing pressures on US monetary policy makers.
Analyzing this report and understanding its impact on future monetary policies will be key in guiding investor expectations and determining market trends in the coming days. Therefore, this report could be an important turning point in determining the strength and performance of the US dollar in the coming period.
A price look at the US Dollar Index reveals volatile movement during the recent period, as the index rose today by 0.2% to reach the level of 105.85 points, compared to the opening level of today’s trading at 105.63 points, while it recorded the lowest level at 105.55 points. It is noted that the index decreased during Wednesday’s trading by 0.65%, after reaching its highest level in two weeks at 106.49 points earlier in trading.
This volatile movement in the value of the US dollar is attributed to profit-taking selling, as well as the decline of the US currency after the Federal Reserve’s decisions. It is noteworthy that these decisions were less aggressive than expected in global markets, which affected investors’ attitudes and prompted some of them to sell to take profits.
It is important to monitor the movement of the US dollar index in the coming period, especially with the release of the monthly jobs report, which is expected to show the extent of the impact of economic conditions and the US labor market on future monetary policies, and thus on the strength and direction of the US dollar.
US Treasury bond yield
The decline in US Treasury bond yields reflects investors’ movement towards safe bonds as an investment haven in light of unstable economic conditions. This move affects the supply and demand for the US dollar, as the demand for US bonds increases the value of the dollar, and on the contrary, a decline in yields reduces its attractiveness, which contributes to the weakness of its value.
It is important to note that a decline in US bond yields may be a result of market expectations about future monetary policies, and could reflect concerns about the economy or expectations about further monetary stimulus. The yield on US 10-year Treasury bonds fell by 0.8 percentage points on Thursday, marking a continuation of the losses seen.
The Federal Reserve took an expected decision on Wednesday to keep interest rates unchanged, as they remained in a range between 5.25% to 5.50%, the highest range since 2001, for the sixth time in a row.
In its policy statement, the Fed emphasized that it does not intend to cut interest rates until it has greater confidence that inflation will move sustainably toward its 2% target. Changes in the monetary policy statement, as happened in this case, may be considered a clear signal of a change in the Federal Reserve’s assessments of the economic situation. It is noted that the risks facing achieving employment and inflation targets have “moved towards a better balance over the past year”, and this represents a decline in confidence compared to previous data.
In addition, the Federal Reserve is set to slow the decline in the balance sheet by lowering the cap on Treasury redemptions to $25 billion per month starting next June 1, compared to $60 billion per month.
Monetary policy trends during his press conference
Jerome Powell, Chairman of the Federal Reserve, shed light on monetary policy directions during his press conference on Wednesday, where he stressed that current policy will remain sufficiently restrictive to help bring the inflation rate back to the 2% target. He also made it clear that it is not currently appropriate to raise interest rates, and does not expect the next step to be lowering interest rates, unless they can achieve greater confidence in inflation achieving the set target.
Powell noted that the risks related to achieving employment and inflation goals moved towards a better balance over the past year, but inflation did not show any noticeable improvement this year, indicating that the path towards achieving the dual goals was not yet clear.
Powell also noted that there are other paths that could indicate interest rate cuts, but that would be if they gain greater confidence and there is unexpected weakness in the labor market.
On the other hand, investors expect an impact on expectations of US interest rate cuts in June and July, based on FedWatch analyses, reflecting their expectations about the future economic performance of the United States and the impact on US dollar levels.
