Deciding on the dollar

31 August, 2016

We enter the last trading day of August, a month that has been dominated by growing debate as to whether the Fed should increase interest rates at their September meeting. This could be decided by the Employment Report, released Friday. But for the moment, the market has been moving more towards that possibility. This is most prevalent on USDJPY, given that there has also been debate on the other side as to the possibility of the BoJ implementing more easing measures in the coming weeks. Just what these could entail is another matter, given that the central bank has thrown pretty much every tool it has at the problem of low inflation (and deflation) over the past several years. Nevertheless, the yen has been underperforming all other major currencies over the past week in response to such speculation. It has also taken the pressure off USDJPY, which has moved away from the 100 level in recent trading sessions.

Whilst the dollar has been in the ascendancy, the outlook for the single currency has been a little more, mixed. We’ve seen very slow and steady against sterling, taking EURGBP down towards the 0.8500 level in recent trading sessions, from the 0.8725 high seen mid-August. For the most part, the single currency has been caught between the policy dynamics of the US and Japan, but in the case of a Fed tightening next month, the euro could perform comparatively well on the crosses. In times of risk aversion, the strong currency account surplus has often proven to be a support for the currency as investors flee currencies with more vulnerable funding needs. For now, the 115.00 level on EURJPY remains key, a close above here not seen since late July.


Source link  
Market Concerns Eased

The first-round voting of the French presidential election was revealed on Sunday night...

Dollar Plunged on Trump Second Statement

The dollar index fell to a 2-week low of 99.91 in the early hours...

Markets Eye on the First Trump-Xi Meeting

US President Trump and Chinese president Xi Jinping, are scheduled to meet today at Trump’s Mar-a-Lago resort in Florida...


Will the French Presidential Election affect EUR?

The first round of the French presidential election...

USD Firms Ahead of Q4 GDP Final Reading

The dollar index has rebounded noticeably from a 4-and-a-half-month low of 98.85, helped by outperforming...

Divergence Between Fed and BoJ

The March FOMC meeting will be held for two consecutive days from today. The interest rate decision will be announced at 18:00 GMT on Wednesday 15th March...


Market Volatility Expected Ahead of President Trump's Speech

In a speech that will be watched by millions of viewers in the United States and around the world, the President is expected to speak of his presidency and address pressing issues like his plans for health care, the tax system, the military, and his goals for his administration...

Gold Trades Below Resistance Ahead of the Fed and NFP

We will see the release of the US ISM Manufacturing PMI, and ISM Prices Paid for January, at 15:00 GMT on Wednesday 1st February...

Sterling Struggles Ahead of Theresa May's Speech

Theresa May will make a speech outlining her plans for Brexit tomorrow, Tuesday 17th Jan, before the UK triggers Article 50 to leave the EU...

  


Share: