Dollar Hits Two-Month Low!
The dollar index fell below 97 on Friday (May 1), hitting its lowest level since late February after posting its biggest daily decline since mid-March. This weakening occurred as markets re-adjusted to the sharp movement in the yen.
The yen's strengthening was the main trigger, amidst allegations of Japanese authorities intervening in the foreign exchange market. Several reports suggested that US officials had been notified in advance, in line with G7 practice, which typically prioritizes coordination for large-scale currency interventions.
On the data front, the latest release showed US manufacturing growth unchanged at a four-year high in April. The report highlighted a solid increase in new orders, lengthening supplier delivery times, and a surge in price pressures amid the Iran conflict, which re-focused market attention on energy-based inflation risks.
On the monetary policy front, Cleveland Fed President Beth Hammack and Minneapolis Fed President Neel Kashkari expressed concerns that the Fed's latest policy statement was too dovish. These comments underscore the challenges of policy communication ahead, especially if the next Fed Chair, Kevin Warsh, pushes for interest rate easing amid persistent inflationary pressures.
Going forward, the market is likely to monitor the yen's follow-up movements following the alleged intervention, energy price dynamics related to the Iran conflict, and signals from Fed officials regarding the direction of interest rates, which could alter yield expectations and the direction of the dollar. (srh)
Source: Newsmaker.id
