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.

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
Subscribe
Please try again
More View more
Real Time News
  • it's not Bitcoin, but $ETH is working on its own breakout at the moment back above the 4k marker after the #Bitcoin ATH https://t.co/MC3el7SaMS
  • $BTCUSD hits $66,000. Everyday is Bitcoin day
  • $BTCUSD hits 65,000. Happy Bitcoin day everyone
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 91.49%, while traders in USD/JPY are at opposite extremes with 74.20%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/TBOioxBaqY
  • Commodities Update: As of 13:00, these are your best and worst performers based on the London trading schedule: Silver: 1.67% Gold: 0.62% Oil - US Crude: -1.03% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/3L8HLnD5v8
  • #Bitcoin - Daily Chart - breakout to ATH . . Watch the close. . . https://t.co/W75XZqabYP
  • Now that the Bitcoin ATH is out of the way - BTC +2.1% @ $65,540 - can we concentrate on Ethereum #btc #bitcoin #eth #ethereum https://t.co/jka7AcE27J
  • Hit series ‘Squid Game’ expected to drive subscriber growth into year end. Get your market update from @RichardSnowFX here:https://t.co/fQBG9dlLfG https://t.co/4KjKPA6u8d
  • $EURUSD res has held at that 1664 spot but buyers stepped-in for some higher-low support, right around prior resistance. could have some continuation left here, next res zone 1700-1736 $EURUSD move will be key to #DXY dynamics https://t.co/oSPWzxUtCg https://t.co/0jBF75ztJe
  • Mid-Week Market Update session with special guest @tastytrade's @tastytradeRyan starting now -- join here: https://t.co/2VlNFcWn8R
Central Bank Weekly: US Dollar has Next Week's Fed Hike Priced In

Central Bank Weekly: US Dollar has Next Week's Fed Hike Priced In

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- The US Dollar has declined throughout September, even as pricing of the Fed’s rate hike timeline as become more aggressive.

- 25-bps hikes are being priced-in for September and December 2018, but then no rate move is anticipated until at least June 2019.

- See the full DailyFX Webinar Calendar for upcoming strategy sessions.

Looking to learn more about how central banks impact FX markets? Check out the DailyFX Trading Guides.

The US Dollar has been on a skid over the past few weeks, but shifting expectations around the Federal Reserve’s rate hike path have had little say in the matter. In September, the US Dollar (via the DXY Index) is down -1.15%, but since its high in mid-August, the greenback as fallen by just over -3% versus its major counterparts.

Yet during this time period, we’ve seen rate hike odds firm up, both in the short- and medium-term time horizons. Over the past six weeks, since the DXY Index high on August 15, rate hike odds for the September FOMC meeting have increased from 92% to 100%. Similarly, odds for a hike at the December meeting have increased 67% to 76%.

Federal Reserve Rate Hike Expectations (September 18, 2018) (Table 1)

Central Bank Weekly: US Dollar has Next Week's Fed Hike Priced In

We’ve previously argued that the US Dollar decoupling from rate hike odds is bad news for the US Dollar. The reasoning remains in place: with two hikes already priced in for the rest of the year, this may be ‘as good as it gets’ for the greenback. The fundamental backdrop for the US Dollar is strong now – the economy is whirring along at +4% annualized growth, jobless claims are at their lowest rate since the 1960s, and the deficit-boosting Trump tax plan is still working its way through – but it doesn’t seem like conditions can get any better.

DXY Index Price Chart: Daily Timeframe (January to September 2018) (Chart 1)

Central Bank Weekly: US Dollar has Next Week's Fed Hike Priced In

The breakdown in price the past few days has increased the credibility of the bear case for the US Dollar. The DXY Index is in the midst of breaking significant near-term support that has held up since the end of August. Price is extending its losses below its daily 8-, 13-, and 21-EMA envelope, while both daily MACD and Slow Stochastics are continuing to move lower in bearish territory. A daily close below the late-August swing lows around 94.43 would confirm a downgrade in the US Dollar's near-term outlook from 'neutral' to 'bearish.'

Read more: DXY Index Lingers Near August Swing Lows for Fifth Day

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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

DISCLOSURES