USD strengthened against other major currencies in the European session on Thursday, following hawkish interest rate signals from the Federal Reserve’s officials.
The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of six global currencies, increased by 0.18% from the previous close to 104.24.
Boston Fed President Susan Collins and Richmond President Thomas Barkin were the latest to join a growing chorus of the U.S. central bank’s officials seeking to persuade the markets they are not in a hurry to cut rates after chairman Jerome Powell last week indicated that a cut as early as March seemed unlikely.
Like his colleagues at the Fed, Barkin stated yesterday that he wants to see a sustained period of calming inflationary pressure before starting interest-rate cuts. “If we see inflation continuing on its very nice, past-six-month run, and particularly if that starts to broaden through the inflationary basket, that’s the kind of signal that would say, now it’s time to start the process of normalizing rates,” he said.
Meanwhile, Collins suggested that “it will likely become appropriate to begin easing policy restraint later this year”.
Following the latest round of cautious messages from the Fed representatives, markets are now seeing May as a likely time for the beginning of rate reductions.