Dollar bulls in control

31 May, 2016

Dollar bulls in control

Dollar bulls remained in control early Tuesday as last week’s comments by Janet Yellen suggesting that a rate hike this summer is on the table continued to echo in markets. The dollar index traded near two-month high as traders continued to adjust their bets on when the Fed could raise rates. Markets are currently pricing 30% probability for June rate increase and slightly higher than 60% for July, indicating that a summer rate hike is partially priced in. These expectations will continue to be the major driver for the U.S. currency on the short-run and traders are awaiting anxiously Fridays labor report to adjust their outlook. However, todays Fed's favorite gauge of inflation PCE price index release shouldn’t be ignored, since it’s the only major inflation report to be released prior to next monetary policy meeting. Personal income and consumption data are also on the calendar, and all what it needs is another surprise to the upside to drive the greenback higher from current levels.

The Aussie outperformed its major peers as net exports and building approvals blew economists’ expectations. AUDUSD rallied 0.9% as upbeat data likely to provide a wait and see approach by RBA suggesting that June or July rate cut will be put on hold. Meanwhile, tomorrow’s GDP figures will provide a better picture on how much exports contributed to the economy’s growth. Bond yields rallied across the curve with 2-years adding 3 basis points to trade at 1.7% making it more attractive for investors searching for yields in developed economies.

The Euro is headed to post its worst monthly performance since November against the U.S. currency dropping by almost 2.9%. EURUSD broke below 1.11 for the first time since mid-March on Monday before recovering slightly higher. German retail sales plunged 0.9% in April, marking the second consecutive monthly decline versus expectations of 0.9% increase. Slowing consumer momentum in Germany did little to move the Euro as traders are more concerned about May’s flash CPI report due at 9:00 GMT, which is likely to show the Eurozone remained in deflation for the fourth straight month. However, the single currency is likely to continue trading range bound until ECB meets on Thursday.

Gold recovered slightly after falling to a three-and-a-half-month low on Monday breaking below $1,200. The yellow metal’s inverse correlation with the U.S. currency seems to remain on hold as risk appetite along with U.S. dollar strength creates the best situation to be short on the safe haven metal. Next target on the downside is the 50% Fibonacci retracement from 2015 December lows to May highs at $1,175.  


Source link  
Markets ignoring political risks

Markets were unmoved by yesterday’s political risk events. Donald Trump's job approval rating took a hit...

The Fed continues to diverge, but is in no hurry

The greenback is falling while everything else is in green today after the Federal Reserve delivered on its promise to hike rates by 25 basis points. While this move was widely expected, many market participants...

Are you ready for some action?

Do not let the quiet session on Monday and early Tuesday fool you, volatility may be just around the corner...


Gold bears continue to dominate

Gold continues to be right in the cross hairs of the bears in the market, as US economic data continues to show a large amount of hope and as Trumps...

Oil gets hammered

Oil markets have shown they are more than capable of large movements but today's movement is the largest we've seen since July and showed...

Oil bears take a swipe

Oil has hit the headlines today after the most recent Crude Oil Inventory figures showed a surplus yet again of 1.50M barrels (3.08M exp), but more important expectations have changed in the US that there will be further use of oil resources as the winter so far has been quite mild...


USD bulls thrive in global markets

US markets continue to be a massive driver for the global economy, as economic optimism continued to pick up pace in the US sending equity markets and the USD higher...

Global risk appetite remains strong

The Australian economy continues to be a roller coaster for any Aussie bulls, but one thing is certain the markets are not paying too much attention at present with the AUDUSD being one of the stand out performers in 2017 so far.

Robust U.S. data fails to lift the greenback, what's wrong?

The strong growth in U.S. retail sales and the surge in consumer prices were expected to continue pushing the U.S. dollar higher on Thursday, but what happened was exactly the opposite, leaving many traders questioning the greenback’s uptrend...

  


Share: