Is the USD in for high pressure

18 October, 2016

The Greenback advanced to a seven-month peak against multiple other major currencies on Monday. This caused traction as the US last week’s economic data had no cause for anxiety, backing the expectations of a rate hike in December.

DXY retained the bidding momentum on Monday rising to a session high of 98.15, highest since March 10. The USD/JPY retreats by 1 percent staging a steadfast rally of last week to 104.50 level.

The common European currency traded at $1.0985, holding on to a three-month low of $1.0964, as the currency cut through on Monday.

The Advance Retail Sales and Wholesale Prices in the US were in-line with the expectations on Friday. Spurring the demand for the US currency as the economy returns to a growth pattern after a flimsy second quarter.  According to Yellen’s speech on Friday in Boston the FED may be forced to create some “high pressure” in the economy to get over the blows, which curbed production, put a dent on the employment and created high recession risks.

There were no insinuations about the interest rates or the monetary policy changes, but there were expressed concerns over the decrease of the US economic capacity, which may involve some aggressive steps to propel its growth. In the speech given on Friday, the question arose about whether it is possible to compensate for the damage done by a temporary transition to a ” high-pressure economy”, combining certain aggregate demand with a high demand for labor. Yellen said that It is possible to determine a certain path that can lead to this.

There is no important data from the US this week but it’s worth to pay attention to ECB meeting on Thursday as well as the Chinese GDP report which can substantially affect the market sentiments and appetite for risk. The ECB Interest rate decision is especially intriguing amid the halt of the asset-purchase program which has been announced recently.


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