Dollar bulls return on confident Fed

4 May, 2017

Dollar bulls return on confident Fed

The U.S. dollar and Treasury yields across the curve bounced higher after the Fed signaled that a June rate hike is still on the way. Monetary policy-makers acknowledged that there is some softness in the economy, but seemed confident that recent economic slowdown is likely to be temporary. Otherwise, there were no surprises in the statement.

The positive tone struck by the Fed was slightly surprising, especially as consumer consumption, inflation, and nonfarm payrolls all headed south in March. Having said that, I wouldn’t fight the Fed and take an opposing view unless softening data continues, forcing the Fed to change trajectory.

Traders’ attention will shift to Friday’s nonfarm payrolls and given the latest ADP private payrolls and ISM non-manufacturing figures, there’s potential for an upside surprise. Private payrolls came slightly above expectations at 177,000 and the employment component of the services index printed 51.4 which also indicates a rebound in NFP after a sluggish 98,000 jobs added in March.

A reading above 190K jobs tomorrow may provide additional support to the U.S. dollar, but it requires a pickup in wages for the rally to sustain on the short term, as such traders should look at the overall health of the jobs market.

The most significant move in currency markets was not the JPY, which declined to a six-week low against the dollar, but the Aussie plummeting 1.5% yesterday. The commodity currency was pressured by falling iron ore and other base metal prices. Iron ore, coking coal, and copper fell 8%, 4.5% and 3% respectively. Meanwhile, gold resumed its downtrend falling by more than 1.1% since yesterday’s Fed decision. 

In Europe, the final debate between Marine Le Pen and Emmanuel Macron did little to shift market expectations. With more than a 20% margin for Macron in the final round of Presidential Election voting, this seems to be fairly priced in the Euro. Today’s services PMI figures across Europe and the U.K. aren’t likely to provide much direction to EURUSD and GBPUSD, with most traders preferring to wait for Friday’s NFP report before taking action. 


Source link  
USD surges on positive risk sentiment

The USD surged back into focus today as markets were more upbeat about the USD and the prospects for the future. This came on the back of a crypto...

Major pairs gain on USD weakness

The USD has taken another beating today on the charts as all the major pairs continued to dominate against the USD. This can be seen as a bit of a surprise...

Bruised dollar not finding support

Many traders have been caught by surprise by the extent of the dollar’s decline over the last week. The USD index fell below 91 for the first time since...


US equity bulls continue to gain

It's been another day of developments for the US economy, as it continues to go from pace to pace. So far the good news keeps coming in with...

Dollar stumbles, Gold extends gains

Asian stocks were mostly higher during early trading on Tuesday, after an unexpectedly upbeat survey of Chinese manufacturing activity...

Dollar selloff in final week of 2017

With only two trading sessions remaining for 2017, liquidity dried up across the global markets. This has been obvious in U.S. and European equities...


US retail sales beat expectations

It's been a funny day for the USD as it slipped lower on Tax legislation worries. For the most part it has fallen around two senators who are keen...

UK jobs report in focus, Gold slips

The British Pound's appreciation against the Dollar was short lived during Tuesday's trading session as investors evaluated the likely impact...

Dollar advances ahead of NFP

The Greenback ventured to a two-week high against a basket of major currencies on Friday morning, amid investor optimism over U.S. tax reforms...

  


Share: