Fed Chairman Powell to speak at IMF meeting
US Dollar Talking Points
The US Dollar Index (DXY) is trading at a new yearly high (100.76) as a growing number of Federal Reserve officials show greater willingness to normalize monetary policy at a faster pace and developments coming out of the International Monetary Fund (IMF) 2022 Spring meeting may influence the greenback as president Jerome Powell must speak at the event.
US Dollar Fundamental Forecast: Bullish
The US Dollar Index (DXY) is set to test the April 2020 high (100.93) as New York Fed Chairman John Williamspermanent voting member of the Federal Open Market Committee (FOMC), insists that the central bank must “reverse the policy actions that we put in place in March 2022” during an interview with Bloomberg News.
Accordingly, William went on to say that a 50bp rate hike is a “reasonable option” as the FOMC expects to push the Fed Funds rate towards a more neutral level, and it looks like the central bank will adjust its approach. in its next interest rate decision on May 4 Governor Lael Brainard insists that the central bank could “reduce the balance sheet at a rapid pace as soon as our meeting in May.”
Until then, further remarks from Fed officials could continue to sway the US dollar as President Powell is expected to address the global economy at the IMF. spring meetingand hints of an imminent FOMC exit strategy adjustment could support the greenback as the central bank is on track to embark on a series of rate hikes accompanied by quantitative tightening (QT).
That said, the US Dollar Index (DXY) may continue to retrace the decline from the 2020 high (102.98) as it about to test the April 2020 high (100.93)and developments from the IMF meeting could fuel further greenback growth if President Powell prepares US households and businesses for another change in monetary policy.
— Written by David Song, Mint Strategist
Follow me on Twitter at @DavidJSong