News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The Consumer Price Index, better known by the acronym CPI, is an important economic indicator released on a regular basis by major economies to give a timely glimpse into current growth and inflation levels. Learn how to better understand CPI here:
  • *Reminder: Weekly Strategy Webinar tomorrow morning at 8:30am EST on DailyFX!
  • Bitcoin ended a 10 consecutive day advance with yesterday's bearish close - breaking pace only after it overtook the 100-day moving average. That 10-day climb matches the longest bull charge with only two other examples. $BTCUSD
  • Recessions can devastate the economy and disrupt the fortunes of individuals, businesses, and investors. But economic decline in the business cycle is inevitable, and your trading can be defined by how you respond to crisis. learn how to prepare here:
  • The ISM manufacturing index plays an important role in forex trading, with ISM data influencing currency prices globally. Find out about the recent history of ISM data, how to track it, and how to trade its release here:
  • The continuity seen across these volatility cycles is a good thing. Historical precedence offer a blueprint for identifying conditions supportive for a vol-event to occur, and how they may unfold. Deepen your knowledge of historical volatility here:
  • Tech stocks pulled back from record territory after Amazon posted tepid Q3 guidance. Get your weekly equities forecast from @margaretyjy here:
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here:
  • When it comes to buying and selling forex, traders have unique styles and approaches. Learn about buying and selling forex here:
  • Recent price action in the US Dollar Index (DXY) casts a bearish outlook for the Greenback as it extends the series of lower highs and lows from earlier this week. Get your weekly USD technical forecast from @DavidJSong here:
US Dollar Aims Higher as Federal Reserve Disappoints Stimulus Hopes

US Dollar Aims Higher as Federal Reserve Disappoints Stimulus Hopes

Ilya Spivak, Head Strategist, APAC

Major Currencies vs. US Dollar (% change)

23 Jul 2012 – 27 Jul 2012

US_Dollar_Aims_Higher_as_Federal_Reserve_Disappoints_Stimulus_Hopes_body_Picture_5.png, US Dollar Aims Higher as Federal Reserve Disappoints Stimulus Hopes

Talking Points

  • US Dollar Aims Higher vs. Majors as Fed Disappoints Stimulus Hopes
  • Impact of ISM, NFP Reports to be Diminished by FOMC Proximity
  • ECB Expected to Cut Rates, May Re-Launch Bond Buying Program
  • Bank of England Rate Decision Unlikely to Generate Strong Reaction

Most major currency pairs continue to show strong correlations with the MSCI World Stock Index, reflecting an intimate sensitivity to risk sentiment trends. This puts global growth expectations front and center, turning the spotlight on the Federal Reserve and the European Central Bank as both deliver their monthly policy announcements in the week ahead.

Market-wide economic growth expectations pencil in a recession in the Eurozone and a narrow pickup in US performance in 2012. This means any added stimulus to be unveiled at these rate decisions speaks directly to mitigating the primary headwind facing the global recovery and amplifying its foremost offsetting force. While the ECB appears primed to offer a dose of further accommodation, hopes for the launch of a third round of Fed quantitative easing (QE3) are likely to be disappointed.

Investors are already pricing in an 82.5 percent probability of another 25bps ECB interest rate cut.To deliver a meaningful boost to risk trends, the central bank will need to deliver above those expectations, and comments from ECB President Mario Draghi last week suggested just such an outcome may be in the works. Draghi warned that if swelling sovereign risk premia in bond yields disrupt monetary policy transmission, dealing with them falls within the ECB’s mandate. That hints the bank may be gearing up to reboot its bond-buying program.

Meanwhile, the Fed seems unlikely to stray from familiar territory. Yields across the maturity spectrum are hovering within a hair of record lows having arrived there without new stimulus since QE2 concluded in June 2011. With that in mind, it seems unreasonable to suggest that more asset purchases are needed to keep credit costs capped or that marginally cheaper funding will bring a significant number of would-be borrowers off the sidelines. That means the most significant benefit of a QE3 program is psychological, making it a tool the Fed is likely to keep in the arsenal to be used in the event that a major dislocation in Europe creates a 2008-style credit crunch.

On net, the degree of stimulus provision between the Fed and ECB is likely to fall short of satiating investors, weighing on risk appetite and broadly boosting the US Dollar against its major counterparts. On the economic data front, US Payrolls and ISM reports take top billing, but immediate follow-through may be limited. Both readings derive their market-moving potential from the outcomes’ implications for monetary policy expectations, which are likely to prove limited this time around given the proximity of the FOMC announcement. Likewise, final revisions of Eurozone PMI readings will take a back seat to the ECB.

The UK PMI data set and the Bank of England rate decision are likely to register as non-events given the likelihood of near-term standstill on the policy front. BOE Governor Mervyn King and company are likely to remain on the sidelines, waiting to gauge the impact of the recently unveiled ECTR and FLS programs before tinkering with new ideas again.


US_Dollar_Aims_Higher_as_Federal_Reserve_Disappoints_Stimulus_Hopes_body_Picture_6.png, US Dollar Aims Higher as Federal Reserve Disappoints Stimulus Hopes

Source: Bloomberg


US_Dollar_Aims_Higher_as_Federal_Reserve_Disappoints_Stimulus_Hopes_body_Picture_7.png, US Dollar Aims Higher as Federal Reserve Disappoints Stimulus Hopes

Source: Bloomberg


US_Dollar_Aims_Higher_as_Federal_Reserve_Disappoints_Stimulus_Hopes_body_Picture_8.png, US Dollar Aims Higher as Federal Reserve Disappoints Stimulus Hopes

Source: Bloomberg


US_Dollar_Aims_Higher_as_Federal_Reserve_Disappoints_Stimulus_Hopes_body_Picture_9.png, US Dollar Aims Higher as Federal Reserve Disappoints Stimulus Hopes

Source: Bloomberg


US_Dollar_Aims_Higher_as_Federal_Reserve_Disappoints_Stimulus_Hopes_body_Picture_10.png, US Dollar Aims Higher as Federal Reserve Disappoints Stimulus Hopes

Source: Bloomberg


US_Dollar_Aims_Higher_as_Federal_Reserve_Disappoints_Stimulus_Hopes_body_Picture_11.png, US Dollar Aims Higher as Federal Reserve Disappoints Stimulus Hopes

Source: Bloomberg

--- Written by Ilya Spivak, Currency Strategist for

To contact Ilya, e-mail Follow Ilya on Twitter at @IlyaSpivak

To be added to Ilya's e-mail distribution list, send a note with subject line "Distribution List" to

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.