Strong Dollar on the Back of Positive U.S. Economic Data

The U.S. dollar strengthened against a basket of major currencies on Friday (April 1), supported by forecasts that the U.S. Federal Reserve (Fed) will accelerate rate hikes after U.S. employment data in March indicated that the labor market and the U.S. economy remain strong.

  • The dollar index against the six major currencies in a basket of currencies rose 0.33% to 98.6320.
  • The US dollar strengthened against the yen at 122.61 yen from 121.59 yen.
  • The dollar strengthened against the Swiss franc at 0.9254 francs from 0.9226 francs.
  • The dollar was higher against the Canadian dollar at 1.2510 Canadian dollars from 1.2479 Canadian dollars.
  • The euro was lower against the dollar at $1.1042 from $1.1073.
  • The pound fell to $1.3105 from $1.3136.
  • The Australian dollar strengthened to $0.7497 from $0.7489.
  • The baht depreciated against the dollar at 33.45 baht per dollar.

Dollar gains after the release of strong U.S. economic data and the prospect of further Fed rate hikes.

Following the release of employment figures from the CME Group’s FedWatch tool, investors are 73.3% confident that the Fed will raise interest rates by 0.50% at its May 3-4 meeting, following a 0.25 % in March.

Fed Chairman Jerome Powell has hinted at an accelerated rate hike, stating that inflation has risen too high, so the Fed will raise rates by more than 0.25% in one or more meetings if needed.

Chicago Fed President Charles Evans said Friday that the Fed will likely raise interest rates seven times this year by 0.25% in an effort to curb inflation.

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