After another week of wild swings in short-term interest rate markets, the US dollar is ending the week stronger against most major currencies. On a trade-weighted basis it is now near its strongest level since last November. Neither the Fed meeting nor the stronger-than expected non-farm payrolls report proved decisive – indeed, the Fed’s policy statement was, if anything, on the dovish side. But whereas Chair Powell was somewhat ambiguous in his remarks, policymakers elsewhere pushed back more forcefully against the policy rate paths discounted in money markets. This led to broad-based drop back in near-term rate expectations, but also a swing in rate differentials in favour of the dollar against a few currencies, as US rates fell by less than those in some other economies.
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