Monetary Policy Left the Kiwi and Aussie Dollar in Red

Monetary policy and other changes affected the overall image of the Dollar and other assets.

Economic data appeared to take a back seat, with a more hawkish than expected Fed considering heavily riskier assets, affecting Dollar.

It turned out to be a busy week on the economic calendar, ending 28th January.

A total of 58 stats appeared monitored, following 58 stats in the week prior.

Of the 58 stats, 27 came ahead of forecasts, with 27 economic indicators coming short of projections. Five stats were in line with predictions in the week.

Looking at the numbers, 23 of the stats reflected an upward trend from previous figures. Of the remaining 35 stats, 34 reflected a deterioration from previous.

For the Greenback, it was the 2nd week in the green territory. The Dollar Spot Index rallied by 1.71% in the previous week to end the week at 97.271. In the week prior, the Index rose by 0.47% to 95.634.

Overview of the Monetary Policy and Dollar

Economic data took a back seat early in the week despite weak private sector PMI and consumer sentiment numbers.

The FOMC rate statement was the main event on Wednesday. A more hawkish FED Chair spooked the markets.

Data released this week appeared mixed, with economic reports taking a back seat to the FOMC meeting minutes and comments. The minutes indicated a slightly more hawkish stance on the economy than expected, which weighed on riskier assets and drove the Dollar higher.

Economic data impressed in the 2nd half of the week supported the FED Chair’s view.

Initial jobless claims dropped from 290k to 250k in the week ending 21st January. GDP numbers also stood positive, with the economy expanding by 6.8% in the 4th quarter. In the 3rd quarter, the economy had grown by 2.4%.

Inflation and personal spending numbers were also essential after Wednesday’s forward guidance at the end of the week.

In January, the Core PCE Price Index increased by 5.9% year-on-year, up from 5.6% in the month prior. In November, personal spending rose by 0.5%.

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