Foreign exchange trading reminder: please ask for beautiful data at the beginning, the US dollar hits a new high in nearly seven weeks, waiting for the test of PCE data

On Friday (February 24), the dollar index was also volatile in Asia, and is currently trading around 104.57, just below the nearly seven-week high of 104.78 set overnight. The dollar held on to modest gains against its major currencies on Thursday, supported by strong economic data that continue to suggest that the Federal Reserve's tightening of monetary policy may take longer if it is to reduce the highest inflation rate in decades.

A string of stronger-than-expected data and recent comments from "a handful" of policymakers in favour of larger interest rate rises have been supporting the dollar this month, while initial jobless claims unexpectedly fell last week, suggesting the labour market remains tight and the economy is resilient.

Friday will release the US January PCE data, which will be the focus of the market this trading day. In addition, it is necessary to pay attention to the speeches of Federal Reserve officials.

"February took everyone by surprise, with strong numbers coming in... underscoring the fact that we're not slowing down enough and inflation is staying sticky," said Clifton Hill, global macro portfolio manager at AcadianAssetManagement. "So through all of this, as yields go up, it's just buying the dollar because the expected slowdown in growth is not materialising, in fact the opposite is re-accelerating."

In late New York trading on Thursday, the euro fell 0.11% to $1.0592 against the dollar, remaining range-bound. Sterling also fell 0.27% to $1.2013 against the dollar on Thursday, shrugging off the recent PMI survey's signal that the Bank of England may raise interest rates again in March.

The dollar index rose 0.08 percent to 104.61 on Thursday, hitting a seven-week high at 104.78.

"We have more important data coming out on Friday," said Joe Manimbo, a senior market analyst at Convera in Washington. "There will be another non-farm payrolls report and another CPI before the Fed's next policy meeting, so the data is key to how much the Fed tightens."

Fed funds rate futures traders are now digesting expectations that the federal funds rate will peak at 5.34 per cent in July and remain above 5 per cent throughout the year. The target range for the federal funds rate has risen rapidly from near-zero levels in March 2022 and is currently between 4.50 per cent and 4.75 per cent.

Hill said that if the economy continues to accelerate and inflation remains sticky, this will lead to higher end point interest rates, and a stronger dollar will make the economy a harder landing.

"Markets are looking for a binary outcome because that's how markets have been trained since the global financial crisis. And I think investors are dealing painfully with reality and it's going to be a much more nuanced and challenging process," says Mr. Hill. "So from a portfolio perspective you really have to be balanced, or at least tactical."

The dollar fell 0.19 percent to close at 134.65 against the yen on Thursday as investors awaited a speech from incoming Bank of Japan governor Kazuo Ueda, hoping for some clues about his bond yield control policy.

At 08:00 Beijing time, the Japanese House of Representatives will hold a hearing on the nominations for the governor and deputy governor of the Bank of Japan, and investors need to pay attention.

Commodity currencies fluctuated at a low level on Thursday, with the Australian dollar closing close to flat against the US dollar at 0.6805; the New Zealand dollar rose 0.14% against the US dollar on Thursday to close at 0.6226.