empty
02.03.2023 10:54 AM
Will the Fed be able to control inflation?

This image is no longer relevant

The main component of the dollar's weakness yesterday was a report from China indicating that their manufacturing sector is growing strongly. It is an important component of China's economic recovery after its massive shutdown. Another factor putting bearish pressure on the dollar was the strength of the euro. Together, these fundamental events led to a 0.39% decline in the dollar.

Also, in the latest report from the Institute for Supply Management, U.S. manufacturing data shows that inflation continues to rise.

The ISM said on Wednesday that the manufacturing purchasing managers' index rose to 47.7% in February from 44.7% in January. These data coincided with the consensus forecast.

The report also noted that activity in the manufacturing sector continues to be at its lowest level since May 2020, when the global economy was forced to stop.

Values of such diffusion indices above 50% mean economic growth, and vice versa. The further away from 50%, higher or lower, the faster or slower the rate of change.

The report said that the price index rose to 51.3%. This is the first time in four months that U.S. producer prices have begun to rise.

Analysts say rising manufacturing prices could mean that the Federal Reserve will not be able to control inflation even as it continues to aggressively tighten monetary policy.

According to the CME FedWatch tool, there is a 73.8% chance that the Fed will raise rates by 25 basis points and 26.2% that the Fed will be more aggressive in raising rates by 50 basis points.

Looking at the components of the report, the new orders index climbed to 47% from 42.5% in January. At the same time, the production index fell to 47.3% from the previous 48%.

The labor market lost momentum, returning to a lower reading of 49.1% from 50.6% in January.

On such mixed data, the dollar is still holding its former positions with small deviations, reinforcing itself with the yield of 10-year bonds.

This image is no longer relevant

Yields on 10-year bonds topped 4% for the first time since October.

Irina Yanina,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Why the U.S. Dollar Keeps Falling

The U.S. dollar fell to its lowest level since January 2024 after President Donald Trump's criticism of the Federal Reserve sparked concerns over the central bank's independence. The dollar weakened

Jakub Novak 11:12 2025-04-22 UTC+2

Loss of Confidence in the Fed Will Pressure the Dollar (Bitcoin Likely to Continue Rising, USD/CAD to Decline)

On Monday, the U.S. stock market experienced a sharp decline, pulling down many global exchanges, as the "turbulent" actions of President Trump continue to shift from one hot topic

Pati Gani 09:00 2025-04-22 UTC+2

Market: Still Waters Run Deep

It's impossible to inject capital into an economy destabilized by politics. Capital continues to flow out of the United States, and Donald Trump's attacks on the Federal Reserve only accelerate

Marek Petkovich 08:52 2025-04-22 UTC+2

What to Pay Attention to on April 22? A Breakdown of Fundamental Events for Beginners

No macroeconomic events are scheduled for Tuesday—neither in the U.S., the Eurozone, Germany, nor the U.K. Thus, even if the market were paying any attention to macroeconomic data, it simply

Paolo Greco 07:46 2025-04-22 UTC+2

GBP/USD Overview – April 22: Dollar Decline Neutralizes Any Positive Economic Changes

The GBP/USD currency pair also traded higher on Monday despite no clear reasons or fundamental grounds for this movement. However, the pound has risen even on days when the euro

Paolo Greco 03:12 2025-04-22 UTC+2

EUR/USD Overview – April 22: The Emperor Has No Clothes...

The EUR/USD currency pair began Monday with a sharp drop from the opening. Interestingly, this time, the fall of the US dollar wasn't triggered by the American president. Any specific

Paolo Greco 03:12 2025-04-22 UTC+2

Will Trump Fire Powell?

The U.S. Dollar Index updated a three-year low on Monday, falling into the 97 range (for the first time since March 2022). The greenback started the trading week with

Irina Manzenko 01:07 2025-04-22 UTC+2

Panic hasn't gone anywhere – the dollar is being sold off, gold is rising, and the S&P 500 has turned downward again

The total speculative bearish position on the US dollar more than doubled over the reporting week, reaching -$10.1 billion. The Canadian dollar and the yen strengthened the most, while

Kuvat Raharjo 01:07 2025-04-22 UTC+2

The Dollar Meant Well. But Things Went as Usual

Be careful what you wish for. Donald Trump's desire to make America great again and return to a golden age is backfiring by eroding trust in U.S. assets, capital flight

Marek Petkovich 01:07 2025-04-22 UTC+2

XAU/USD. Analysis and Forecast

Gold continues to show strong demand, trading near its all-time high, just below the key psychological level of $3400. The hardline international trade policy pursued by U.S. President Donald Trump

Irina Yanina 19:15 2025-04-21 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.