Dollar on the Defensive

4 May, 2016

The dollar has taken a considerable beating over the past week, although has clawed back some of the losses over the past 24 hours. In the bigger picture, we’ve once again reached the phase where the stronger dollar story, based on widening policy differentials, is lying shattered. The dynamics of the currency markets are also changing on the non-dollar side, with those central banks that are still easing in non-conventional ways (principally EUR and JPY) finding that their currencies are not reacting in the way anticipated or desired. The euro is up nearly 2% since it last eased policy early March, with the yen up 4% over the same period and nearly 11% since the announcement of negative (deposit) rate at the end of January. Of course, the weaker dollar has played a part in this, but the euro is up vs. most of the major currencies as well over this period. The bottom line is that the old rules have been replaced and monetary policy is no longer the primary driver of currencies.

Yesterday, there were also some Fed officials on the defensive, with Lockhart calling a June move “a real option” with Williams also sounding hawkish. For today, the early focus will be with the final PMI data for the Eurozone at 08:00 GMT. We also have the ADP numbers in the US ahead of the US payrolls data on Friday. Durable goods data also seen at 14:00 GMT. In terms of levels, the 1.1616 high on EURUSD sets a new resistance level, whilst 105.55 is the initial support on USDJPY.


Source link  
US Jobless Claims Lowest Since 1973

US Department of Labor released Initial Jobless Claims for the week ending October 13th that showed a resilient and stable labor market...

Politics Influence Markets

With fears abating surrounding the threat of Catalan independence, the EUR moved higher overnight. Catalan President Puigdemont stated...

US Unemployment at Lowest Level

On Friday, the US Department of Labour released Nonfarm Payrolls for September. The meagre forecast of 88K was beaten with an even worse...


Further Strong Data From the US

On Wednesday, the US Institute for Supply Management (ISM) released Non-Manufacturing PMI for September that surprised the market...

Upbeat Data Boosts Dollar

On Monday, the US Institute for Supply Management (ISM) released data showing the index of national factory activity surged to a reading...

Harvey & Irma Effects Still Evident

The EUR suffered a second day of selling pressure, as the markets are growing concerned that the rise in right wing nationalism witnessed...


Risk-On or Risk-Off?

The rhetoric continues between North Korea and the United States with North Korea’s Foreign Minister, Ri Yong Ho, describing President Trump’s recent comments as “tantamount...

German & New Zealand Elections

The results of the German Election have re-elected Chancellor Angela Merkel for a fourth term. Her CDU party won fewer votes than was expected and Chancellor Merkel...

Fed Holds Rates for Now But...

Unsurprisingly, the Federal Reserve kept rates on hold following the end of its 2-day meeting on Wednesday. They did, however, indicate that...

  


Share: