US Dollar Strengthens After Fed Chairman's Statement

Illustration of the dollar (Photo: Doc. Antara)

JAKARTA - The US dollar strengthened against other major currencies at the end of trading Friday, August 26, after Federal Reserve Chairman Jerome Powell signaled that the central bank may need to raise interest rates further to ensure inflation is under control.

The dollar index, which measures the greenback against six other major currencies, rose 0.09 percent to 104.0776 following Powell's statement.

"Although inflation has fallen from its peak... inflation is still too high," Powell said on Friday (25/8/2023) at the annual economic consulate in Jackson Hole, Wyoming.

"We are ready to raise interest rates further if needed, and intend to maintain policies at a strict level until we believe that inflation is moving down sustainably towards our targets."

Experts have their own interpretation of Powell's speech.

In June, the Fed temporarily suspended its struggle against inflation due to concerns over the impact of bank pressure on lending. It is possible that the central bank will choose to pause again in September, as it awaits additional data amid uncertainty.

"We argue that the Fed is more likely to take a wait-and-see approach with data and try to understand more about why the labor market remains strong, regardless of the inflation experience we experience and higher interest rates in the economy," said Sinead

After Powell's speech, stocks bounced between profit and loss before moving stronger into positive territory. The yields from two-year US government bonds rose 3.8 basis points to 5.054 percent, while the yields from 10-year government bonds changed slightly at 4.239 percent.

At the end of New York trading, the euro fell to 1,0808 US dollars from 1,0809 US dollars in the previous session, and the English pound fell to 1,2596 US dollars from 1,2607 US dollars.

The US dollar was purchased at 146.3690 Japanese yen, higher than 145.8610 Japanese yen in the previous session. The US dollar fell to 0.8838 Swiss francs from 0.8845 Swiss francs, and increased to 1.3591 Canadian dollars from 1.3575 Canadian dollars. The US dollar rose to 11.0306 Swedish krona from 10.9889 Swedish krona.