Weekly Trading Forecast: Can the Dollar Extend its Bull Trend?
Looking into the dollar’s backdrop, there is little of the fundamental motivation we would normally expect the currency to advance on. Without a turn in speculative appetites, groundswell in the market’s rate forecasts or material drop in other majors; the dollar’s rally is likely to stall.
ECB President Draghi pointed to one gauge in particular that exhibited the decline of inflation expectations in the Euro-Zone – which might be enough to push the ECB towards a more aggressive non-standard easing program such as QE.
We may see the British Pound regain its footing ahead of the next interest rate decision on September 4 should the fundamental developments coming out of the U.K. further boost interest rate expectations.
Looking ahead, RBA policy bets as well as general market risk appetite remain the dominant themes to monitor for the Aussie. On the policy front; a void of local economic data is on the calendar heading into the end of the month.
A lull in high-profile domestic news-flow puts external forces in the spotlight as the primary drivers of New Zealand Dollar price action in the week ahead. The central issue on this front continues to be the evolution of the expected time gap between the end of the Fed’s QE3 asset purchases in October and the first subsequent interest rate hike.
Looking ahead to next week, traders will be closely eyeing the second print for 2Q GDP with consensus estimates calling for a slight downward revision to an annualized pace of 3.9% from 4% q/q.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.