The US Dollar Strengthens Early Friday Ahead of Powell, Industrial Production, and the Holiday Weekend
Early Friday, the US dollar was stronger against its major trading partners ahead of a speech by Federal Reserve Chairman Jerome Powell, the release of May industrial production data, and the start of a three-day weekend.
Powell is scheduled to speak at 8:45 a.m. ET at a Fed conference on the role of the US dollar, but he may also speak about monetary policy and the economy. Powell’s remarks come after the Federal Open Market Committee raised the federal funds rate by 75 basis points on Wednesday, with forward guidance indicating that another 75-basis-point increase is possible at the July 26-27 meeting as well.
Powell’s semi-annual testimony before the Senate Banking Committee is scheduled for June 22, followed by testimony before House Financial Services Committee on June 23.
Industrial production data will be released at 9:15 am ET, followed by monthly leading indicators and state-level unemployment data for May, both at 10:00 am ET.
A quick summary of foreign exchange activity heading into Friday:
USDJPY rose to 134.6916 from 132.2414 at the Thursday US close and 133.1177 at the same point Thursday morning. The Bank of Japan’s decision to keep rates steady, announced overnight after their meeting, caused a sharp sell-off of the yen. The BOJ acknowledged foreign exchange volatility but promised no action. There were no Japanese data releases on Friday’s schedule.
USDCAD rose slightly to 1.2982 from 1.2948 at the Thursday US close and 1.2944 at the same time Thursday morning. There are no Canadian data on Friday’s schedule. The Bank of Canada meets next on July 13 after a 50-basis point rate increase at the June meeting, with further monetary policy tightening expected.
GBPUSD slipped modestly to 1.2313 from 1.2352 at the Thursday US close but was up sharply from 1.2055 at the same point Thursday morning after the Bank of England announced a 25-basis point rate increase. The pair hit a high of 1.2394 in the middle of Thursday’s session as the announcement that included forward guidance that the BOE will continue to act forcefully to fight inflation.
USDEUR slipped to 1.0515 from 1.0552 at the Thursday US close but remained above the 1.0400 level at the same point Thursday morning. EU consumer prices hit a record high on an annual basis in May, data released earlier Friday showed. Core prices also accelerated in line with expectations. The European Central Bank’s monetary policy committee meets on July 21.