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The dollar remains positive dynamics, while its DXY index remains near the resistance level 109.00. Earlier this week, DXY broke last month's high 109.14 and touched a new local high since October 2002 at 109.44.
The tough rhetoric of the head of the Fed Powell regarding the prospects for monetary policy of the American central bank gave the dollar a new bullish momentum. Speaking at the opening of the Jackson Hole forum last Friday, he reaffirmed that the Fed's priority goal is to fight high inflation, and "the Fed should continue like this until the job is done." At the same time, "restoring price stability will take some time and will require the decisive use of central bank instruments."
"We need to raise the discount rate to just above 4% by early next year and keep it there," and "containment of inflation will be painful in the short term; it will take a lot of stamina," Cleveland Federal Reserve Bank President and FOMC member Loretta Mester said today.
"It will take several years to get back to 2% inflation," John Williams, another FOMC member and head of the New York Fed, said yesterday. In his opinion, inflation is still too high, financial conditions have tightened quite a lot since the beginning of the year, and this tightening is in line with the Fed's policy direction.
In other words, the tight cycle of Fed monetary policy tightening will continue for now, perhaps even at the same pace. Thus, the trend of further strengthening of the dollar remains.
On Friday, the publication of key macroeconomic statistics for the US is expected. At 12:30 (GMT) data on the US labor market for August will be published. The positive momentum of recovery is expected to continue, which allows Fed leaders to continue to fight inflation at an accelerated pace, and this is a bullish factor for the dollar.
