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
EUR/USD
Mixed
GBP/USD
Bearish
USD/JPY
Bearish
Gold
Bullish
Oil - US Crude
Bearish
Bitcoin
Bearish
More View more
Real Time News
  • The Australian Dollar and New Zealand Dollar tend to rise with stocks. They have recently fallen despite gains in the #SP500. What does this mean for $AUDUSD and $NZDUSD ahead? #AUD #NZD #RBA #RBNZ - https://www.dailyfx.com/forex/fundamental/article/special_report/2020/01/17/AUDUSD-NZDUSD-Outlook-Looks-Past-Stocks-to-Rate-Cut-Bets.html?CHID=9&QPID=917702 https://t.co/ddf2fV7Kyl
  • A few snippets from today's commentary. Check out the link below for the full story (via @DailyFX). https://t.co/I31tuq764r https://t.co/x0BaiOFA1P
  • Have you joined @DailyFX @facebook group yet? Discuss your #forex strategies and brush up on your skills with us here: https://t.co/jtY1G7g8yx https://t.co/e2YrN3dBrl
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 98.00%, while traders in France 40 are at opposite extremes with 79.59%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/UL7hqSD2Ki
  • US Dollar Forecast: $USD Lacking Impetus Ahead of Consumer Sentiment #Forex traders shift focus away from US-China trade deal headlines - perhaps toward the monthly release of #ConsumerSentiment data for volatility and clues on the Greenback's next move https://www.dailyfx.com/forex/fundamental/us_dollar_index/usd_trading_today/2020/01/16/us-dollar-forecast-usd-lacking-impetus-ahead-of-consumer-sentiment.html
  • Forex Update: As of 05:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.11% 🇦🇺AUD: -0.02% 🇯🇵JPY: -0.03% 🇨🇭CHF: -0.05% 🇬🇧GBP: -0.06% 🇨🇦CAD: -0.07% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/Kxcb9EtIWb
  • Indices Update: As of 05:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.45% France 40: 0.26% Wall Street: 0.07% US 500: 0.00% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/I5YIsKQAog
  • 🇯🇵 JPY Tertiary Industry Index (MoM) (NOV), Actual: 1.3% Expected: 1.0% Previous: -5.2% https://www.dailyfx.com/economic-calendar#2020-01-17
  • The $JPY has weakened as a bounce-back in risk appetite saps haven-asset demand. However, the old uptrend line still provides clear resistance. Get your market update from @DavidCottleFX HERE:https://t.co/IMhgQ9jbF9 https://t.co/I7087olftk
  • Heads Up:🇯🇵 JPY Tertiary Industry Index (MoM) (NOV) due at 04:30 GMT (15min), Actual: N/A Expected: 1.0% Previous: -4.6% https://www.dailyfx.com/economic-calendar#2020-01-17
US Dollar May Rise on CPI, Trade Wars and Emerging Markets Stress

US Dollar May Rise on CPI, Trade Wars and Emerging Markets Stress

2018-09-08 14:00:00
Ilya Spivak, Sr. Currency Strategist
Share:
US Dollar upcoming economic data calendar

US DOLLAR FUNDAMENTAL FORECAST: BULLISH

  • US Dollar buoyed by upbeat economic data, safety-seeking demand
  • CPI data echoing wage growth uptick may boost Fed outlook further
  • Trade wars, emerging markets jitters might prolong risk aversion

See our free guide to get help gain confidence in your US Dollar trading strategy!

The US Dollar accelerated higher last week as market sentiment deteriorated and Fed rate hike expectations firmed, speaking to the greenback’s haven and yield appeal (as expected). Emerging market shares and currencies plunged amid worries that a US-led rise in borrowing costs may destabilize several key sovereigns, including Turkey, Brazil and Russia. That offered support from safety-seeking flows.

Meanwhile, ISM data showed faster manufacturing- and service-sector activity growth than economists predicted, setting the stage for fireworks as Augusts’ jobs report hit the wires. Perhaps most critically, the release showed that wage inflation soared to a nine-year high of 2.9 percent unexpectedly (although suspicions were entertained ahead of the release). This bolstered priced-in Fed rate hike bets.

Looking ahead, Augusts’ CPI statistics take top billing on the economic calendar. Consensus forecasts envision a downtick from 2.9 to 2.8 percent. If the spike in wages proves to be indicative however, an upside surprise may be in the cards. That could boost conviction in a December rate increase. As it stands, the futures-implied probability of such an outcome stands at 67 percent, the highest in a month.

Furthermore, potential risk-off catalysts abound. An upshift in the projected Fed tightening cycle may continue to sow discord in emerging market assets. Trade war escalation is a concurrent worry after US President Trump threatened an additional $267 billion in anti-China tariffs to follow the $200 billion top-up still pending deployment. Eurosceptic triumph in upcoming Swedish elections may be another flashpoint.

On balance, this seems supportive for the US currency. Still, while a tectonic shift in the Fed outlook is unlikely without an improbably dramatic data miss, sentiment trends can be fickle. Even a relatively modest win on this front – like Canada’s ascension to a revised NAFTA accord or a Brexit negotiations breakthrough – may eat into the Dollar’s haven-based support. Proceeding with caution seems prudent.

--- Written by Ilya Spivak, Sr. Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

US DOLLAR TRADING RESOURCES

OTHER FUNDAMENTAL FORECASTS

NZD/USD Prices May Fall on Swedish Election and as ECB Sinks Euro

The Japanese Yen Moves into the Tariff Conversation

Trade Wars and an Emerging Market Crisis Likely To Keep Oil Volatile

Positive Momentum Will Continue to Drive Sterling Higher

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

DISCLOSURES

News & Analysis at your fingertips.