The dominating dollar

11 October, 2016

There is little standing in the way of the US dollar at this point in time. If we look at the past seven sessions on the dollar index, where we’ve seen a 1.7% increase, there have only been three other brief prior periods during the year when we’ve seen a similar pace of appreciation. Several factors are at play here, not least the building expectation of a December rate hike from the Fed, together with the latest polling following the weekend TV debate in the US, which has put Clinton more firmly ahead. Short-term at least, a Clinton presidency removes the uncertainty that would prevail on a transition to Trump, so for the moment at least, markets are taking this well. Furthermore, as I pointed out last week, the US 2Y treasury yields has further to increase if we are to more confidently price a December tightening, over and above the 1.00% level and the past week has seen further travel to that direction (currently 0.86%).

Elsewhere, the latest push higher on oil prices has seen the Canadian dollar push further ahead, with the Brazilian real not that far behind. Brent pulled back from just below the USD 54 level yesterday, but the recent uptrend remains intact, providing ongoing support to commodity currencies. Russia and Saudi have made a joint pledge to limit production, which is also providing support. At the other end of the scale, sterling continues to move lower, both against the dollar and also the single currency. There are no major releases on the calendar today likely to upset this underlying tone, both to the dollar and sterling, but the latter especially does remain vulnerable to some correction higher given the level of short positions built up over recent weeks.


Source link  
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%...

US Inflation Disappoints

US Consumer Price Index data was released and failed to impress the markets. With US gasoline prices spiking, following the disruption caused by the recent Hurricanes...


Can CPI Follow PPI Lead?

In early Friday trading, the markets are relatively static as they wait, in anticipation, for today’s US inflation data that will potentially give confirmation...

Fed Minutes: Inflation Conundrum

USD broadly declined as the markets digested the release of last month’s FOMC meeting minutes. Many FOMC Members are still concerned...

UK output data falls but expectations rise

On Sunday, The Confederation of British Industry released their monthly indicator of output for UK manufacturers, retailers and service companies...


US Economy Growing Faster Than Forecast

Data released on Thursday indicated that the US economy grew at a faster pace in Q2 than expected. The US Commerce Department released...

New Fiscal Year Could See Changes

With many countries entering a new fiscal year in October, many investors are summarising this past year’s portfolio performance while setting new goals...

New US data did not add positive

Published data on construction activity in the US in August slightly exceeded expectations. The number of building permits reached...

  


Share: