The eclipse of the US Dollar

14 February, 2017

The eclipse of the US Dollar

The US Dollar started the week off with a pickup climbing close to the three-week high at 101, as Trump pledged last week to unveil the details of the “phenomenal” tax cuts for the US companies. These eased investors angst in the key area of the president’s policies.

Trump bets on the growth in investments (again in new jobs) by lowering taxes for businesses, while the tax relief for individuals, should lead to an increase in the consumer spending. With the swelling of the budget deficit, inflation pickup may be greater than currently expected. This should be a signal for the FED to switch from the wait-and-see position to a proactive one where the regulators will protect the economy from going into overdrive with timely increases in the interest rates. So, it is the right expectation to see a rally in the US Dollar, however, it remains a mystery how the government will deal with a strong currency, which could dampen the growth of US exports.

The yields of US long-term bonds have resumed growth after a short-term decline in the last week. Its steady growth clearly points towards a further acceleration of inflation expected by the market. The profits of ten-year bonds rose by 0.67% to 2.425% on Monday.

Japanese Yen
The strengthening of the Yen was interrupted during the Asian session due to the sudden straightening in the Dollar. USD/JPY rebounded from 113.20, testing the 114.04 level on the GDP data. Although, the annual growth averaged 1.0% the quarterly data and nominal GDP fell short of forecasts. The yield on ten-year Japanese bonds also continued to grow, rising by 4.60% on Monday to a level of 0.091%. The market confidence in the revival of economic growth in Japan strengthened, and considering the strong greenback, USD/JPY pair has a little probability of continuing the decline in the medium term.

The British Pound

The British Pound keeps sticking to the level of 1.25 in anticipation of the consumer inflation data on Tuesday, as the president of the Bank of England hinted towards the previous meeting as an example. Starting that the rate increase would be justified if the economic data showed the continuing underlying momentum of the economy. It’s likely to see a strengthening of the Pound in anticipation of the report and the data above forecasts may allow the pair GBP/USD to test the level of 1.26.


Source link  
The outsider on the Forex market

The Greenback has certainly taken all chances to become an outsider on the Forex market this week...

Chinese stocks are posting biggest gains

The Chinese stock market closed on a positive territory, posting the biggest gain since the end of November 2016...

NFP will leave a long-lasting impression

The Australian regulator is riven by contradictions. On the one hand, the economy requires lower rates...


Australian Dollar is waiting on the down-low

The Asian stock market began the week with an advance, in anticipation...

Euro under pressure

The European currency extended its fall after the ECB official, Yves Mersch, denied speculations about QE tapering, making it clear that the regulator is not yet going to change its dovish views...

Oil prices rise amid speculation on OPEC agreement

Oil prices are trading in positive territory on Tuesday, after the Iranian Oil Minister...


Another currency to climb the peak

The comments of the FED officials Erik Rosengren and Loretta Mester...

Pound trades look risky

The British Pound rose above the level of 1.24 after the Bank of England decision last week...

Go short!

When it comes to the EUR/USD pair, then we have a descending channel on the weekly chart...

  


Share: