The U.S. dollar rose against most major currencies after Federal Reserve Chairman Jerome Powell’s remarks during the Jackson Hole Forum, one of the most prominent global economic events. In his annual speech, Powell gave strong signals that a rate cut was imminent, but did not specify the exact timing of this cut, which sparked market interest and led to a noticeable movement in dollar exchange rates. Powell noted that it is time to adjust monetary policy, explaining that the general trend is clear, but determining the timing and pace of interest rate cuts will depend on upcoming economic data and evolving forecasts, as well as the balance of risks. This statement reflects the Fed’s strategy in dealing with inflation and full employment, which is the dual mission the bank seeks to achieve.16> In his speech, Powell asserted that inflation was a “global phenomenon,” driven by increased demand for goods, disruptions to supply chains, weak job supply in the labor market, and rising commodity prices. These statements highlight the challenges the Federal Reserve faces in trying to balance monetary policies to counter inflation while ensuring full employment. Following the remarks, Feed Watch showed a 25-basis point drop in market expectations for a rate cut during the September meeting, to 63.5% from 92.3% in the previous month. In contrast, expectations of monetary easing rose 50 basis points to 36.5% from 3.8%. These changes reflect the growing anticipation in the markets for the Federal Reserve’s policies and how they affect the US economy. On the trading front, the dollar index rose by 0.2% to 100.8 points, hitting a high of 100.9 points and a low of 100.5 points.
Factors that led to rise of dollar after Powell’s remarks
The US dollar index saw a significant rise after the remarks of Federal Reserve Chairman, Jerome Powell, at the Jackson Hole forum, where the speech sparked widespread interest in financial markets and investors. This appreciation of the dollar reflects the markets’ response to Powell’s hints about future monetary policy and economic outlook. Powell’s remarks were a key focus in this context, as he indicated the possibility of reducing the Gradual shame interest based on future economic data. But despite the reference to a rate cut, his statements were unspecified on the timing of this cut, further emphasizing investors on the stability of monetary policy and their expectations about the future moves of the Federal Reserve. One of the main factors that led to the rise in the dollar index was the clarity of the signal given by Powell on a possible adjustment in monetary policy. His statement that “it is time to adjust policy” sent a strong signal to markets that the Federal Reserve may be about to take steps to improve economic conditions, boosting investor confidence in the strength of the US economy and the stability of the dollar. The dollar index rose as a result of this Because investors consider that a more balanced monetary policy would be beneficial to the dollar in the global context. Moreover, the reference to progress in controlling inflation was an additional factor in strengthening the value of the dollar. Powell confirmed that the Fed is now focused on achieving its full employment target after making progress in reducing inflation. These statements reinforce confidence in the Fed’s ability to manage the economy effectively, increasing the dollar’s attractiveness as a safe-haven currency.
What is impact of the rise of USD on economic sectors
The rise of the US dollar has multiple and complex effects on various economic sectors. A strong dollar plays an important role in the global economy and has positive and negative effects that vary by sector. In this context, it is important to understand how the rise of the dollar affects various aspects of the economy and how different sectors react to these changes. One sector that is noticeably affected by the dollar’s rise is the exports sector. When the dollar rises, U.S. exports become more expensive for foreign buyers. This rise in cost can lead to lower demand for U.S. products and services in international markets, which could negatively affect companies that rely heavily on exports. Companies that export their goods abroad may find it difficult to maintain market share or may have to lower prices to offset the high cost. Which affects its profits. For example, companies in sectors such as automotive, aerospace, and export-driven technology could face falling demand and shrinking revenues. On the other hand, companies that rely on imported raw materials or on external manufacturing may benefit from a stronger dollar. A strong dollar makes it cheaper to buy raw materials and goods from abroad, which can lower production costs for companies. Companies that manufacture products abroad or rely on international supply chains may find that a stronger dollar can enhance their international competitiveness by reducing costs and increasing profit margins. The financial sector is also affected by the appreciation of the dollar, especially in global financial markets. A strong dollar can attract foreign investment to the US markets due to high yields, leading to increased cash flows to the United States.
