et of six major currencies – held above 102.00 despite the pullback seen in the American session on Tuesday and stretched higher on Wednesday.
“The economy is doing better than expected and a healthy labor market continues to support household spending,” said Nela Richardson, chief economist, ADP. “We continue to see a slowdown in pay growth without broad-based job loss.”10-year US Treasury bond yield holds steady above 4% following Tuesday's upsurge.
Inflation in the US, as measured by the change in Personal Consumption Expenditures Price Index, fell to 3% on a yearly basis in June from 3.8% in May, the US Bureau of Economic Analysis reported on Friday. This reading came in below the market expectation of 3.1%. The Fed raised its policy rate by 25 basis points to the range of 5.25%-5.5% following the July policy meeting as expected. In the post-meeting press conference, Fed Chairman Jerome Powell refrained from confirming another rate hike this year and said that every policy meeting will be live."If we see inflation coming down credibly, we can move down to a neutral level and then below neutral at some point," Powell told reporters, noting that the policy was already restrictive.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing . QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.