The dollar surged on Thursday following the release of data showing the U.S. economy grew faster than expected in the second quarter, suggesting a recession is less and less likely in the second half of the year.
This increases the likelihood that the Federal Reserve could further hike interest rates, after doing so once more on Wednesday, if it continues to see strong economic numbers across the board.
“One of the clearest messages coming through from the press conference was that Chair Powell felt the Fed was ‘not in an environment where we want to provide a lot of forward guidance’. In other words: listen to the data, not the Fed,” said analysts at ING, in a note.
Traders have turned a little wary Friday ahead of the release of the June personal consumption expenditure index, the Fed’s favorite inflation gauge, but by the time of the next Fed meeting in September the policymakers will also have two new CPI reports and two new job reports to digest.
