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  
Dollar is waiting for what Powell says

The U.S. dollar has returned to growth on the comments from the Fed officials about the need of further rates increases this year and next one. At the end...

Toxic lira can push euro to $1.04

The collapse of the Turkish lira spreads its toxic influence on the European and EM financial markets. Asian bourses have been losing more than 1% at Monday...

Dollar consolidates expecting rally

Financial markets rise on positive sentiments about earnings and China's fiscal stimulus. That pushed down the demand for USD, but more likely it is just...


USD defense will be short-lived

The dollar index reached the one-year highs on Wednesday due to the demand for safe assets. USDX reached level 95.43 on Thursday, breaking the peak levels...

FOMC expect to reach neutral policy

The FOMC minutes highlighted some increased risks to the US economy particularly concerning trade relationships but the view still holds that the Fed should...

US FOMC expected to raise rates again

UK Consumer Price Index (YoY) (May) is expected out at 2.5% against 2.4% previously. Producer Price Index – Input (YoY) (May) is expected...


PMI expected to weaken further

UK Construction PMI (May) will be out with an expected headline number of 49.7 from a prior number of 52.5. The consensus is for a drop in the numbers...

BOE Expected to Keep Rates at 0.5%

UK Industrial Production (YoY) (Mar) is expected to be 3.1% against a previous 2.2%. Industrial Production (MoM) (Feb) is expected to be 0.2% against...

Consumer Price Index Takes Centre Stage

UK Budget Report will be released. This is a mini-budget and outlines the government’s updated budget for the fiscal year, including infrastructure...

  


Share: