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Dollar Flat as Upbeat U.S. Data Fuels Rate-Hike Calls

3/1/2019, 11:26:46 AMBasics of Trading
Dollar Flat as Upbeat U.S. Data Fuels Rate-Hike Calls

The U.S. dollar was flat against a basket of major currencies Thursday as stronger U.S. economic data raised expectations the Federal Reserve may consider hiking rates this year.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.02% to 96.06.

Gross domestic product increased at a 2.6% annual rate in the fourth quarter, the Commerce Department said in its advance estimate on Thursday, in line with economists' forecasts.

The Chicago PMI rose to a reading of 64.7 in this month from 56.7 last month, topping economists' estimates for a reading of 58.1.

"Growth is probably not strong enough right now to induce the Fed to resume its tightening cycle,"  Wells Fargo  (NYSE:WFC) said. "But we look for the FOMC to tap on the brakes again with another 25 bps rate hike later this year (probably sometime in the third quarter)."

The report comes just a day after Federal Reserve Chairman Jerome Powell delivered an upbeat assessment of the economy and said the central bank was looking at adjust its runoff of the balance sheet policy later this year.

GBP/USD fell 0.32% to $1.3266 after hitting a seven-month high on Wednesday amid growing expectations that a no-deal Brexit will be averted.

U.K. Prime Minister Theresa May said earlier this week British lawmakers would get the chance to vote on a delay to Brexit If her withdrawal gets voted down on March 12.

EUR/USD rose 0.40% to $1.1380, while USD/JPY rose 0.35% to Y111.37. The yen came under pressure as strong U.S. economic data pushed the U.S. 10-Year higher, supporting an uptick in greenback.

USD/CAD gained 0.01% to C$1.3155.