Published on 09.12.2022 16:27

The dollar pushed higher on Friday against the euro, after a strong round of economic data from the US with investors cautious as they weigh the outlook for U.S. Federal Reserve policy against the chances that higher interest rates could lead to a recession.

The latest producer price index from the US, which is a key indicator of business confidence hit the market at 0.3 percent against analysts’ expectations for a figure of 0.1 percent.

The Michigan consumer sediment index which measures the level of consumer confidence also came in strongly at 59.1 against consensus for a figure of 53.3 and shows the US economy is still powering ahead despite the recent interest rate hikes

The focus now will be next week’s interest rate decision by the US Federal Reserve where traders and investors will be on the watch for any signs that the Fed is getting ready to pause or continue with its rate hikes.

This is still an open question for many in the market and whatever the Fed decides will dictate the EUR/USD currency pair next week.

"With inflation risks subsiding and the Fed’s path becoming more predictable just as energy prices fall, geopolitical tensions ebb, and China begins its reopening process, investors are moving money out of the United States toward undervalued markets elsewhere," said Karl Schamotta, chief market strategist, at Corpay in Toronto.

"All of this could come to a sudden stop next week if inflation surprises to the upside and the Fed sounds more hawkish than expected, but for now, the music is playing, and investors have to get out of their chairs." He added.


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