The dollar index seems to be on track to see a large gain in the coming month. This is being forecasted as the Feds are looking for a rate hike in the near term. The comments passed by the Feds on rate hike have helped the dollar to gain in the market closing for the week. This is also buoyed by consumer confidence and demand that has risen since last month.
On Friday it was found that the dollar had risen to a week’s high figure as the gains have come in over four consecutive sessions. Even though there has been a meltdown in global markets this week, the Feds have kept the door open for a rate hike in the coming month that has instilled confidence in the US market. The dollar index is considered to be a benchmark of the US currency’s value against major currencies around the world. This index rebounded back to a value that has stuck through this week, changing the low trend that was continuing for the past seven months. The financial markets have also calmed down after the turmoil that was brought about by the Chinese economy.
There were gains on the index after Stanley Fischer, the Vice Chairperson of the Federal Reserve pointed out the impending hike in interest rates that would come by. Though initially the Feds were uncertain about hiking the rates from September, it appears to be in the offing now. However, some Fed officials were optimistic about the rate hike coming in from September and hence, traders have picked up the cue and are adding on a fifty percent more increase in the rate for the market in October.
The Feds would be depending on economic data, including payroll details in order to take a fundamental view of the monetary policy and how to go about changes in that. As per the direction that the Feds take, the currency investors will move accordingly. The payroll reports that have come in for August, especially of the non farm sector, show that jobs have been growing in the country. The unemployment rate is also going down, which sets the ground for a rate hike to occur in September. When the market turmoil came from, the Feds assured that the index would not be hit and hence, investors were advised to stay calm. With the confidence being seen in the Fed officials, investors can go bullish in their investment decisions in the coming weeks.