The US dollar posted modest gains in the middle of the trading week as investors continue to pencil in higher interest rates following Federal Reserve Chair Jerome Powell’s testimony on Capitol Hill this week. The greenback had been sliding since November but generated momentum in February after hotter-than-expected inflation data. Will the buck mirror last year’s rally? The latest economic numbers might offer a window into how the central bank might react.
According to the Bureau of Labor Statistics (BLS), the number of job openings slowed to 10.824 million in January, down from an upwardly revised 11.234 million. This was higher than the market estimate of 10.5 million.
Job quits eased below 3.9 million to kick off the year, down from 4.091 million in December.
In addition, according to ADP, private businesses in the US created a better-than-expected 242,000 new jobs in February, up from an upwardly revised 119,000 in January. This was led by the services sector, which added 190,000 new jobs.
On the housing front, mortgage applications surged 7.4% for the week ending March 3, according to the Mortgage Bankers Association (MBA). This comes as the 30-year mortgage rate inched higher to 6.79%.
The US trade deficit rose to $68.3 billion in January, slightly lower than economists’ expectations of $68.9 billion. Exports jumped 3.4% to $257.5 billion, while imports climbed 3% to $325.8 billion. The US economy recorded trade gaps with China, the European Union, Mexico, Vietnam, Japan, and Canada.
The US Treasury market was mostly up across the board, led by short-term bonds. The benchmark ten-year yield rose 0.5 basis points to 3.979%, while the two-year yield climbed 5.1 basis points to 5.062%. The two- and ten-year yield curve inversion widened to beyond -100 basis points.
The US Dollar Index (DXY), which measures the greenback against a basket of currencies, rose 0.06% to 105.68, from an opening of 105.62. The index has surged more than 1% this week, lifting its year-to-date gain to beyond 2%.
The USD/CAD currency pair rose 0.33% to 1.3801, from an opening of 1.3755, at 18:29 GMT on Wednesday. The EUR/USD was flat at 1.0551.