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.

Free Trading Guides
Oil - US Crude
More View more
Real Time News
  • #Forex Forecast via @DailyFX: US Dollar Technical Outlook on $DXY, $AUDUSD, $USDCAD, $USDJPY & $EURUSD Full Analysis ⬇️ https://www.dailyfx.com/forex/technical/article/fx_technical_weekly/2019/11/17/usd-price-us-dollar-chart-forecast-dxy-audusd-usdcad-usdjpy-eurusd.html
  • Further escalation in Hong Kong will likely bode poorly for risk appetite https://t.co/0NjUd3ahBu
  • How should you trade around event risks and what steps can you take to improve your trading psychology? Find out from @JoelKruger, a trading consultant and mentor. Only on Global Markets Decoded. Missed the episode? Read up here:https://t.co/JWIGJk4vKa https://t.co/WB39x4GP99
  • Poll - Does your personality match your #tradingstyle? Vote and find out from @WVenketas here: https://t.co/vREsUIWSJd https://t.co/Ft0ExAmMpq
  • #Dow Jones hits record high, however, central bank liquidity prompts volatility implosion. #FTSE 100 among underperformers with focus remaining on politics. Get your #equities market update from @JMcQueenFX here: https://t.co/EOFleGSeBp https://t.co/ecAyfSUeAM
  • RT @C_Barraud: 🇪🇺 #ECB’s Muller Says More Assets Could Join Stimulus List in Slump - Bloomberg https://t.co/roGEgu0VTQ
  • With increasing volatility in weather patterns, how might storms, hurricanes and floods rattle the supply chain for petroleum-based products and impact crude oil prices? Find out from @JStanleyFX here:https://t.co/O4dgBl47fq https://t.co/OQYqZAYt9S
  • Currency Strategist,@PaulRobinsonFX is a Swing trader. What is your #tradingstyle? Take the quiz and let us know: https://t.co/LPBOcS0Vtd https://t.co/WzRYeqRhUL
  • Despite what your #tradingstyle is, you should be keeping a trading journal. How can you start keeping a trading journal? Find out: https://t.co/0akgWbyJEw https://t.co/4ehMlN4zv1
  • The Euro’s struggle to move higher against a range of currencies continues and without further support this is likely to continue into the year-end. Get your $EURUSD market update from @nickcawley1 here: https://t.co/myZ7R0eGUb https://t.co/12WJd53Cx4
Dudley Dialog Drives the Dollar After In-Line CPI Print

Dudley Dialog Drives the Dollar After In-Line CPI Print

2016-08-16 13:32:00
James Stanley, Currency Strategist

Talking Points:

To receive James Stanley’s analysis directly via email, please SIGN UP HERE

- FX Markets have been active this morning, as a decline in USD is reversing after the release of July CPI; but the driver here probably has less to do with the in-line CPI print and more with comments from New York Fed President, Mr. William Dudley.

- Mr. Dudley has provided numerous pieces of market-moving commentary over the last year, but this morning’s comments harken back to May, when the Fed talked up the prospect of higher rates at their meeting in the next month. With FOMC minutes from the most recent meeting set to be released tomorrow, the US Dollar may have ammunition to continue this top-side move into that release.

- If you’re looking for trading ideas, check out our Trading Guides. And if you want something more short-term in nature, check out our SSI indicator. If you’re looking for an even shorter-term indicator, check out our recently-unveiled GSI indicator.

The major event from the overnight session was a fairly pronounced bout of US Dollar weakness. Some sources were calling this a ‘crash’ but in actuality the move had tallied around a -.8% decline on the day peak-to-trough, which should not fit any definition of a ‘crash.’ Making matters more interesting is the fact that the bulk of this decline came-in well ahead of the release of U.S. CPI for July.

There is, however, something else that is likely setting those alarms off and that’s the strength that has been seen in the Yen from the overnight session, and there wasn’t even necessarily a directly attributable catalyst for this price action. USD/JPY broke below the vaulted ¥100.00-psychological level as Yen-strength raged through the Asian and European sessions, amounting to a -1.7% decline in the pair.

Dudley Dialog Drives the Dollar After In-Line CPI Print

Created with Marketscope/Trading Station II; prepared by James Stanley

Once CPI printed in-line with estimates and unchanged from July, the USD drop began to reverse; but this may not have been entirely-related to that CPI print, as around the same time we saw New York Fed President, William Dudley, drop comments denoting that a rate hike in September is on-the-table for the Federal Reserve.

Mr. Dudley had echoed the sentiment from the April FOMC meeting in which the Fed said that they felt markets were underpricing the probability of a hike in the following month. This led to a month of strength in the Greenback as investors factored in that slightly-higher probability of near-term rate hikes. And just as we saw in April, the most recent Fed statement took a slightly more-hawkish tint towards monetary policy moving forward, as the Fed removed a key phrase from their most recent statement, saying ‘near-term risks to the economic outlook have diminished.’

With the release of Fed minutes from that most recent July meeting set to be released tomorrow at 2PM ET, markets may have a driver to look for a continued reversal in the U.S. Dollar. On the chart below, we look at this morning’s USD reversal after the release of CPI and as those comments from Mr. Dudley made their way into markets:

Dudley Dialog Drives the Dollar After In-Line CPI Print

Created with Marketscope/Trading Station II; prepared by James Stanley

This wouldn’t be the first time that Mr. William Dudley had provided compelling, market-moving commentary. Back in February, Mr. Dudley’s commentary was key in re-setting market expectations around the Fed’s rate hike trajectory, and during the major equity declines in August of last year he had provided multiple comments to help support stock prices.

--- Written by James Stanley, Analyst for DailyFX.com

To receive James Stanley’s analysis directly via email, please SIGN UP HERE

Contact and follow James on Twitter: @JStanleyFX

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


News & Analysis at your fingertips.