Shaping up for a volatile dollar

1 September, 2016

We enter a new month and it’s a month that is going to be pivotal for the dollar. The greenback has been clawing away at the prospect of a further rate increase from the Fed and tomorrow’s employment report could well determine whether the Fed has the ammunition to move rates higher later this month. Certainly, the message from Fed officials has largely reflected an intention to increase rates, but not going as far as a commitment. The Fed has probably wrong-footed the market once too often on that front, hence we have not had the level of forward guidance seen in the past. This sets up the dollar for a potentially choppy few weeks ahead.

Before then, the overnight session has seen better than expected PMI data in China, with the manufacturing series back above the 50.0 level at 50.4, from 49.9 in the previous month. Currencies have been held to a relatively narrow range, with the Korean won the main moving and weakening around 0.5% on disappointing current account data. The yen has stabilised somewhat after the weakening seen over recent sessions, whilst EURJPY is struggling for a sustained move above the 115 level. The China data gave a modest lift to the Aussie, AUDUSD bottoming out yesterday just below the 0.75 level.

For today, the focus will be on the final PMI data seen in both the UK, Europe and also the US, together with ISM manufacturing data at 14:00 GMT. We’re likely to see greater scrutiny of UK data over the coming month as the dust settles from the Brexit vote.


Source link  
Positive Economic Data for Euro and UK

Data released on Thursday from Markit Economics showed eurozone’s thriving economy powered ahead in November, with new manufacturing orders...

UK Growth Forecast Lowered

UK Chancellor Phillip Hammond delivered an Autumn Budget that appeared to be somewhat neutral in its content. More sobering was the updated forecast...

Eurozone economy is robust but...

Speaking at the Frankfurt European Banking Congress, ECB President Mario Draghi, commented that although the eurozone economy was robust...


Trump: Jobs, jobs, jobs!

Data released on Friday showed US job growth accelerated in October after hurricane-related disruptions in the prior month, but a sharp retreat in average earnings and an increase...

UK Interest Rates in Focus

The Bank of England is widely expected to raise UK interest rates for the first time in 10 years today. An expected 0.25% rise, to 0.5%, will push...

Strong US Q3 GDP Boosts USD

The US Commerce Department released Q3 GDP data on Friday, showing the US economy expanded at an annual pace of 3%. With the back-to-back...


So, Who Will Be the Next Fed Chair?

The markets are turning their attention to who will become the next Chairperson of the Federal Reserve. President Trump recently commented that...

Bank of England Faces Conundrum

On Wednesday, data released by the UK Office for National Statistics (ONS) showed average weekly earnings (excluding bonuses) rose...

UK Inflation at 5-Year High

The likelihood of a rise in UK interest rates, for the first time in a decade, gained momentum on Tuesday as UK CPI edged up from 2.9% to 3.0%...

  


Share: