US dollar rising against most majors - Nomura

Analysts at Westpac noted that the US dollar has had another good week, rising against almost all major currencies. 

Key Quotes:

At last week’s policy meeting, the Federal Reserve kept its key interest rate steady at 1.50-1.75%. This was very much expected by markets, so attention focused on the wording of the FOMC’s statement. This could easily have been taken as leaning dovish. In particular, the FOMC inserted the word “symmetric” when talking about its 2% inflation objective.

Just ahead of the FOMC meeting, we saw data on the Fed’s preferred inflation measure. This rose from 1.7% year on year in February to 2.0% in March. So the Fed’s reminder that the 2% inflation objective is a target, not a ceiling, can be seen as a heavy hint to markets not to get excited about aggressive rate hikes if inflation rises above 2%.

Consistent with this reading, the US dollar fell a little when the FOMC statement came out. But the greenback soon recovered. The euro and the pound for instance slumped to multi-month lows. Friday’s US employment report showed a fall in the unemployment rate to 3.9%, a low since 2000. If this positive mood on the US economy continues, then we should be in for another week of US dollar gains against most currencies. But the Aussie dollar could perform a bit better than most."