Never miss a story from Ilya Spivak

Subscribe to recieve updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from Daily FX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Ilya Spivak

You can manage you subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

US Dollar price chart

FUNDAMENTAL FORECAST FOR THE US DOLLAR: BULLISH

  • US Dollar retreats as emerging markets stabilize, CPI data disappoints
  • Durable upshift in Fed rate hike outlook likely to offer renewed support
  • Haven-seeking demand may return on Kim/Moon meeting, Tria speech

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

The US Dollar backtracked last week. Ebbing haven demand seemed to be main culprit as emerging market stress moderated, with shares and currencies in the space recovering from 16-month lows. An unexpectedly soft US CPI print likewise weighed on prices, although that move was fleeting as the upshift in Fed rate hike bets after Augusts’ upbeat jobs data proved to be durable.

Indeed, the priced-in probability of an increase in December following an almost certain one this month now stands at 77.2 percent, up from 66.9 percent one week before. A lull in top-tier domestic economic news flow means there is relatively little scope for data disappointment to undermine that. Fed officials have also fallen silent ahead of the following week’s FOMC meeting, neutralizing risk from any dovish commentary.

On balance, that leaves the greenback with room for recovery. Last week’s decline seems to be at odds with the prevailing fundamental backdrop. The Fed remains the most hawkish among the G10 central banks and any lasting improvement in sentiment – whether it comes from easing emerging market stress or elsewhere – will ultimately give the central bank still more room to tighten.

Renewed risk aversion may offer additional support. The presidents of South and North Korea will meet for the first time in 11 years even as relations between Pyongyang and Washington sour anew, leaving ample room for a stray tweet from Donald Trump to generate jitters. Italy’s finance minister Giovanni Tria is also due to speak, which might set the stage for conflict between the new populist government and the EU.

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

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

US DOLLAR TRADING RESOURCES

OTHER FUNDAMENTAL FORECASTS:

New Zealand Dollar Forecast - NZD Rise to Gain if GDP Sinks RBNZ Rate Cut Bets, Trade War a Risk

Crude Oil Forecast – Brent Up 10% Since August Low, Stubborn Supply Concerns Persist

British Pound Forecast – Sterling Continues to Benefit From a Lack of Bad News