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  
Global Economic Optimism Continues

Global equities moved higher on Monday as optimism continued to improve on global economic growth. However, USD...

BOJ Monetary Policy Remains Steady

The Bank of Japan maintained their monetary policy on Friday whilst upgrading their assessment of private consumption...

Final Confirmation for a June Rate Hike

The crucial US labour market data for May will be released today, June 2nd at 13:30 BST. It includes non-farm payrolls...


GBP Under Pressure

The Brexit negotiation process is one of the focuses of the upcoming UK election. Although the Conservative Party has pledged a smooth and orderly...

Oil Slumped Post OPEC Extension

On Thursday, OPEC announced that the existing output cut agreement will be extended for an additional 9 months...

USD Bounces From Month Low

Trump administration has presented its 2018 budget plan to Congress last evening. The budget plan calls to slash $3.6 trillion...


Dollar index hit a new low

The dollar index hit a new post presidential election low of 96.95 on Friday May 19th. EUR/USD hit a high of 1.1211...

USD Hit Post Election Low

To date the dollar index has almost given up all of the post presidential election rally...

BoE Expected to Keep Rates Steady

ECB Governor Draghi will make a speech in the Dutch Parliament at 12:00 BST today. It will be Draghi first speech...

  


Share: