Weekly Trading Forecast: How Long can the US Dollar Defy Gravity?
The US Dollar trades near major highs versus the Euro and other major FX counterparts as interest rate expectations remain center-stage. But further gains are hardly guaranteed—here are risks to watch.
The US Dollar rallied to fresh multi-month highs versus the Euro and other major counterparts as investors bought into the previous week’s breakout.
This week – with its twelve ECB policymaker events – provides plenty of opportunity for clarification of what changes the ECB might make at its December policy meeting.
Last week, my colleague David Song reiterated our Bearish forecast on the British Pound, citing the dovish tone taken by the Bank of England during Super Thursday and the fact that it looked as though the Sterling was going to continue getting hit by depressed rate expectations moving forward.
The long-term outlook for USD/JPY remains bullish as the Federal Reserve remains on course to remove the zero-interest rate policy (ZIRP), but the key developments coming out of Japan may produce a larger correction in the exchange rate should the Bank of Japan (BoJ) continue to endorse a wait-and-see approach at the November 19 interest rate decision.
The Australian Dollar mounted a spirited recovery against its US counterpart last week but bets on a widening Fed vs. RBA policy divergence may prove the move short-lived.
Halfway through the month of November, the New Zealand Dollar has retraced much of its October gains.
Gold prices fell for a fourth consecutive week with the precious metal down nearly 0.3% to trade at 1081 ahead of the New York close on Friday.
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