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
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bearish
Wall Street
Bearish
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • High beta currencies are among the underperformers with the Pound on the back foot. Get your $GBPUSD market update from @JMcQueenFX here:https://t.co/c2wNgduMlI https://t.co/PjnbvM4w7J
  • Indices Update: As of 13:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.65% FTSE 100: 0.52% France 40: 0.50% Wall Street: -0.02% US 500: -0.06% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/q6ROX6VkUm
  • $Gold and $SPX have both held support at key zones thus far. End of the first full week of Q3 - next week brings on earnings season. https://t.co/19q9npaHNr https://t.co/mdBa6W9vs9
  • Join @malkudsi 's live #webinar at 10:00 AM ET / 2:00 PM GMT to learn about the basics of technical analysis and how to incorporate it into your trading . Register here: https://t.co/wFAMspwUfD https://t.co/ldxvf2AJgm
  • 🇨🇦 Average Hourly Wages YoY (JUN) Actual: 6.8% Previous: 9.96% https://www.dailyfx.com/economic-calendar#2020-07-10
  • $USDCNH | Dollar-Yuan bouncing back above 7.0 as broader bullish trend holds. Meanwhile, the US looks to move forward with federal contract bans on doing business with Chinese tech companies that pose national security risk, and now news China state funds are liquidating stocks. https://t.co/cxkjeDaWqJ
  • 🇨🇦 Full Time Employment Chg (JUN) Actual: 488.1K Previous: 219.4K https://www.dailyfx.com/economic-calendar#2020-07-10
  • 🇨🇦 Employment Change (JUN) Actual: 952.9K Expected: 700K Previous: 289.6K https://www.dailyfx.com/economic-calendar#2020-07-10
  • 🇨🇦 Unemployment Rate (JUN) Actual: 12.3% Expected: 12% Previous: 13.7% https://www.dailyfx.com/economic-calendar#2020-07-10
  • 🇺🇸 PPI MoM (JUN) Actual: -0.2 Expected: 0.4% Previous: 0.4% https://www.dailyfx.com/economic-calendar#2020-07-10
Forex Analysis: Dollar Forecast to Strengthen on Fiscal Cliff, Israel Conflict

Forex Analysis: Dollar Forecast to Strengthen on Fiscal Cliff, Israel Conflict

2012-11-17 06:13:00
David Rodriguez, Head of Product
Share:
Dollar_Forecast_to_Strengthen_on_Fiscal_Cliff_Israel_Conflict_body_Picture_1.png, Forex Analysis: Dollar Forecast to Strengthen on Fiscal Cliff, Israel Conflict

Fundamental Forecast for US Dollar: Bullish

The US Dollar (ticker: USDOLLAR) matched its largest single-week advance since July as financial market uncertainty and a 2 percent drop in the US S&P 500 boosted demand for the safe-haven currency.

A disappointing week for risky assets sets the stage for further US Dollar strength—especially as we see uncertainty surrounding the so-called Fiscal Cliff negotiations and renewed arm conflict in Israel and the Gaza Strip weigh on sentiment. Earlier hints that the US Federal Reserve would enact further Quantitative Easing initially sent the Greenback lower. Yet even the prospect of further monetary policy easing was not enough to offset a renewed wave of pessimism as the S&P finished near multi-month lows.

A holiday-shortened trading week ahead offers relatively little in terms of foreseeable economic event risk, but that doesn’t rule out Dollar volatility through the days ahead. We’ll pay particularly close attention to Fed Chairman Ben Bernanke’s Tuesday address at the Economic Club in New York—that which will give further clues on the Fed’s next steps for monetary policy.

The recently-released minutes from the Federal Open Market Committee’s October decision made it fairly clear that officials were likely to enact further easing at next month’s meeting. The expiration of “Operation Twist” comes at a time when FOMC officials likely believe they should be doing more—not less—to boost the sagging labor market and broader economy. Indeed, officials showed little fear over price pressures despite open-ended Quantitative Easing measures and a slightly above-forecast Consumer Price Index inflation number for October.

Yet markets proved ultimately unimpressed at the prospect of further QE, and the combination of worries over the US Fiscal Cliff and escalating violence in Israel and the Gaza strip pushed US stock markets to their lowest levels in months. Now past the highly-anticipated US Presidential elections, politicians once again take center-stage as the threat of sizeable tax increases and spending cuts threatens to pull the US back into recession through early 2013.

The facts remain clear: if nothing is done, the combination of tax increases and spending cuts could cost the United States up to 4 percentage points in GDP growth in the New Year. Given that the damage would essentially be self-inflicted, one would assume that the US Congress and President would seek a resolution as quickly as possible.

Yet the Democratic party controls the presidency and Senate while the Republicans control the house; there must be compromise between parties to get a deal done. Early rhetoric from Republican and Democratic leaders suggests this round could be different than the last. But it may take nothing short of a miracle for a breakthrough to occur before the soft deadline of January, 2013.

Expect to hear the term “Fiscal Cliff” frequently in the next two months as financial markets grapple with this fairly significant risk to the global economy. And though we won’t get clarity on a potential deal for some time, be mindful of volatility when President Obama or House of Representatives Speaker Boehner speak on the status of negotiations.

We could be in for more uncertainty and dour sentiment across the S&P 500 and broader risky asset classes. Clear deterioration in armed conflict between Israel and the Gaza Strip could likewise keep a lid on optimism and further benefit the safe-haven US Dollar. - DR

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

DISCLOSURES

News & Analysis at your fingertips.