Dollar falters but strength remains ahead of jam-packed week

27 October, 2016

The US dollar has taken a bit of a breather this week as it consolidates its recent gains ahead of major economic data and events in coming days. For around a month, the greenback has been on an exceptionally sharp incline as expectations for a Federal Reserve rate hike this year have progressively increased. A mid-December rate hike continues to be seen as the most likely scenario. But before that may or may not happen, there are plenty of data releases and events that could have a heavy impact on that scenario, and on the direction of the US dollar.

The rest of this week brings two key data releases: Durable Goods Orders (including the core data that excludes transportation) and Advance GDP. Both of these readings could have an effect on the Fed’s eventual direction, especially in the event of any major deviations from expectations. But perhaps much more important for Fed-watchers and dollar-traders will be the slew of events scheduled for next week. Besides key policy decisions from major central banks – including the Reserve Bank of Australia, the Bank of Japan, and the Bank of England – the November Fed decision occurs next Wednesday. The Fed statement should provide some further clues as to the likelihood of a December rate hike (if, as expected, rates are indeed kept unchanged on Wednesday).

Aside from the Fed meeting, October’s non-farm payrolls employment data will be released next Friday – this heavily anticipated jobs report will play a major role in the Fed’s policy direction in December. Besides this, also in store for next week are both the ISM manufacturing and non-manufacturing PMI reports, which are vital barometers of the US economy for the Fed.

Amid this bombardment of data releases and Fed activity, the US dollar is likely to see some volatile moves, especially surrounding the mid-week Fed statement. As noted, the dollar has been in fluctuation ahead of these events, although it has maintained its overall strength as expectations of higher US interest rates have provided strong support. In the case of USD/CHF, an upside breakout above a long-term downtrend channel last week resulted in the currency pair rising to less than three pips short of parity (1.0000) before pulling back. With any further dollar strength next week in the event of positive economic data or a more hawkish-leaning Fed, a USD/CHF breakout above parity could open the way towards major upside targets at the 1.0100 and 1.0250 resistance levels.


Source link  
Markets turn focus towards Trump address to Congress

On the evening of Tuesday, February 28th, US President Trump is slated to give a major address to a joint session of Congress in lieu of the usual State of the Union address...

FOMC meeting minutes signal rate hike fairly soon – dollar unimpressed

The minutes from the most recent FOMC meeting three weeks ago – the first such meeting since Donald Trump’s presidential inauguration – were released on Wednesday afternoon...

Crude oil look set to resume bullish trend

Oil prices have been coiling for several weeks now with both contracts spending most of their time in a tight four dollar range...


US stocks could rise 6-7% further before potential crash

The US stock markets hit repeated new record highs last week. The positive sentiment has continued at the start of this week, with Asian and European markets drifting higher in an otherwise quiet day. US index futures point to further gains at the open later on...

Fed gives little indication of interest rate trajectory

The Federal Open Market Committee (FOMC) meeting has come and gone, and little has changed in the financial markets as a direct consequence. In unanimously deciding to keep interest rates unchanged, as widely expected...

Surging equities at risk ahead of earnings season

While earnings season has started on a very positive footing, however, banks and other financial companies were already expected to shine more than others due to rising interest rate expectations. As non-financial companies begin to report in the coming weeks...


Gold rebound heading for major resistance

For more than two weeks, the price of gold has been in a strong rebound from its late-December bottom around the $1125 level. This rebound follows a sustained drop in price that began from the July highs around $1375 and followed-through to the December lows...

Crude oil at higher plateau ahead of US inventory data

Crude oil prices have recently been lifted to year-to-date highs on a successful agreement to cut oil production and control supply among major OPEC and non-OPEC oil producers...

Gold rebounds off key level ahead of busy week

As we reported the possibility on Friday of last week, gold did indeed fall further lower this week. The rising dollar, yields and US equity prices all weighed on the appeal of the buck-denominated, noninterest-bearing and perceived safe-haven precious metal...

  


Share: