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.

0

Notifications

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

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Bearish
Wall Street
Mixed
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • #ASX200 struggling to break above key resistance at 6000 after Westpac retracted its calls for an #RBA rate cut in October RSI hints at fading bullish momentum which suggests that a push towards the monthly low is on the cards, if 200-MA resistance (6020) remains intact. $XJO https://t.co/iXrCqbayfc
  • $AUDJPY poised to move higher after finding support at the 200-day moving average. $CADJPY eyeing a push back towards the yearly high $EURJPY perched atop key support after breaking below Rising Wedge support. Are further losses in the offing? $JPY https://www.dailyfx.com/forex/market_alert/2020/09/28/Japanese-Yen-Outlook-AUDJPY-CADJPY-EURJPY-Levels-To-Watch-.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Moss&utm_campaign=twr https://t.co/v03Ge14yvW
  • Gold price vs. US Dollar Index (DXY) -52 weeks https://t.co/VuZTTnNxmm
  • Join @ZabelinDimitri 's #webinar at 11:30 PM ET/3:30 AM GMT to find out how geopolitical risk will affect the markets in the week ahead. Register here: https://t.co/hsULxMNOtM https://t.co/26Vn8xNZHF
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Gold: -0.02% Silver: -0.10% Oil - US Crude: -0.24% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/k82jSelAG3
  • The US Dollar continues to show tones of reversal as Q3 winds down. Can buyers drive the currency through the Q4 open? Get your #currencies update from @JStanleyFX here: https://t.co/mnVvIOhtay https://t.co/H5xQXSalBf
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.43% 🇳🇿NZD: 0.20% 🇬🇧GBP: 0.18% 🇨🇦CAD: 0.03% 🇪🇺EUR: 0.02% 🇨🇭CHF: 0.01% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/TtUEpT5jDK
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.63%, while traders in EUR/GBP are at opposite extremes with 64.46%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/uxUVKs9BeK
  • 10 out of 11 S&P 500 sectors ended higher on Friday, with half of the companies in the green. Information technology (+1.63%), consumer discretionary (+1.44%), utilities (+1.12%) were among the best performing ones, whereas energy (-0.26%) lagged. https://www.dailyfx.com/forex/market_alert/2020/09/28/Nasdaq-100-Futures-Extend-Gains-Hang-Seng-and-Nifty-50-May-Rebound.html https://t.co/eIecw9NQQD
  • The Hang Seng Index (HSI) has likely formed a bullish “AB=CD” pattern, with the “D” point found at around 23,080. A rebound from the “D” point may lead to more gains with an eye at 23,760 and then 24,200. https://t.co/ObmqqYa5P4
3 Factors Dragging Down the Dollar

3 Factors Dragging Down the Dollar

2013-09-16 14:56:00
Kathy Lien, Technical Strategist
Share:

The confluence of unfriendly US data, Fed-related uncertainty, and the dissipation of safe-haven demand has pushed the US dollar broadly lower ahead of this week’s FOMC policy announcement.

There are three reasons why the US dollar (USD) is trading lower against all major currencies this morning: economic data, speculation about the next Federal Reserve Chairman, and the latest developments in Syria.

According to the most recent US economic reports, the recovery in the manufacturing sector is losing momentum. In the New York region, manufacturing activity dropped to its lowest level in four months with the Empire State index falling to 6.29 for the month of September, down from 8.24 in August.

Over the past few months, weaker activity in NY has not coincided with slower activity across the nation, but this is another piece of data that will challenge the Fed’s upcoming monetary policy decision. Industrial production activity accelerated in the month of August, but the increase was less than the market had anticipated, and this was also the fifth consecutive month that industrial productivity missed expectations.

New Front-Runner for Next Fed Chairman

Over the weekend, Larry Summers withdrew his name from consideration as the next Fed Chairman. Compared to Janet Yellen, he was largely viewed as a bigger friend to the dollar. While Summers and Yellen are both doves who feel that growth is a bigger risk than inflation, Yellen played a key part in designing the central bank's current quantitative easing (QE) program, and more recently, she was a big advocate of forward guidance.

Summers, on the other hand, has not shared his views on monetary policy, but his unpredictability and potential for unscripted comments means he could have caused more volatility in the financial markets. While he was President Obama's preferred candidate, his decision to bow out was motivated by his concern that Obama would not be able to rally the Senate behind his nomination.

See related: Fed Rumor Sparks “Lightning Rod of Controversy”

Yellen was the more dollar-negative candidate, and now that she has become the clear front-runner, the currency has traded lower across the board.

Syria Resolution Is a Done Deal

The greenback also lost its safe-haven bid after the US and Russia reached a deal on Syria over the weekend. Syria must submit a comprehensive list of its chemical weapon stockpiles in one week and allow international inspectors to be on the ground no later than November. All chemical weapons must be destroyed or removed by mid-2014 or the United Nations would have the authority to use force. With a military strike no longer an imminent threat, the US dollar and the price of oil have both moved lower.

The Dollar’s Biggest Event Risk This Week

Looking ahead, the focus this week is on Wednesday’s Federal Open Market Committee (FOMC) rate decision, although the latest string of weaker economic reports has made it even more difficult for the central bank to justify tapering this month. A slowdown in consumer spending, decline in confidence, and sluggish job growth all suggest that the recovery is losing momentum, but at this stage, there are two remaining motivations for tapering this week.

See also: The Only 2 Reasons Left to Taper Now

By Kathy Lien of BK Asset Management

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

DISCLOSURES