The US Dollar has remained elevated this morning but further growth in the safe haven currency, following comments from Federal Reserve chairman Jerome Powell which pointed towards further interest rate hikes to tackle soaring inflation. This commentary reiterated previous comments that the Central Bank would likely need to raise rates more than expected, and possibly in larger rises due to recent economic data proving to be better than forecast.
This was backed up yesterday with the release of ADP Employment figures which measure the levels of private employment within The US. The release showed over 40,000 jobs were created compared to January and further backs up the room for further rate hikes to be implemented in the coming months.
Keeping with The US, we have their weekly jobs data released later this afternoon as well as their Non-Farm Payroll figures set to be released tomorrow afternoon. Positive figures from both of these metrics, as well as Inflation and Retail Sales next week could support The USD even further and it wouldn’t be a surprise to see GBP/USD drop closer to the 1.16 area and EUR/USD potentially break the 1.05 level.
Next week will also be a crucial week for Euro buyers with The ECB set to raise interest rates again, markets are currently pricing in a 50 basis point hike. A rate hike of this level and any potential bullish comments by The ECB next week could counteract the EUR/USD swings, but would again put pressure on GBP as it currently struggles to move up towards 1.13.