Dollar is soaring because of Fed’s decisive actions backed by new data

The US dollar has reached a record level in the last 20 years as a result of the new data release, which indicates the resilience of the economy. Such conditions provide the Fed with wider possibilities of aggressive actions towards the rate increasing and inflation curbing.

The dollar continues its rise following the government report on the shrinking number of filings for unemployment benefits, which continues its decline. Such figures indicate a tightening and high demand in labor markets.

Manufacturing indicators in the US also increased over the last month, which was reflected in the data received from the Institute for Supply Management. The data demonstrated a recovery in employment and new orders, and it’s also possible to state that the inflation peak was reached due to the continuing softening of price pressures.

According to the words of Oanda’s market analyst Edward Moya, there’s nothing unusual about the dollar hitting a record high, as because of the world-wide economic decline it’s generally viewed as a safe-haven asset, and the ongoing aggressive policy of the Fed backed by the resilient economy is also taken into consideration.

The upcoming nonfarm payrolls report is now the next focus of attention for the market participants, as it will be the main reference point for the Fed during their further meetings this month.

If there is a strong reading, the dollar as a safe haven currency will likely get even more attention.DX