News & Analysis at your fingertips.

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. See our updated Privacy Policy here.

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
Subscribe
Please try again
More View more
Real Time News
  • Do you know how to properly Identify a double top formation? Double tops can enhance technical analysis when trading both forex or stocks, making the pattern highly versatile in nature. Learn more about the double top formation here: https://t.co/t9Flsqcxo9 https://t.co/m06h4hjwVP
  • It’s important for traders to be familiar with FX spreads as they are the primary cost of trading currencies. Understand a pair's spread here: https://t.co/zEEUHZBx7g https://t.co/LcfxFxFrTY
  • Forex sentiment analysis can be a useful tool to help traders understand and act on price behavior. Learn how to get the most out of understanding trader sentiment here: https://t.co/rJznrXkcYz https://t.co/UgYlEILK5n
  • Emotions are often a key driving force behind FOMO. If left unchecked, they can lead traders to neglect trading plans and exceed comfortable levels of risk. Read on and get your emotions in check here: https://t.co/eILWbFgHRE https://t.co/BXp2z6E0Kl
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfJE79 https://t.co/xGuTYZqYwh
  • There are three major forex trading sessions which comprise the 24-hour market: the London session, the US session and the Asian session. Learn about the characteristics of each session here: https://t.co/reRmDe1Ksp https://t.co/EvRHfRQLgk
  • The Australian Dollar remains vulnerable in the week ahead, eyeing risks such as a dovish RBA, surging Covid cases and recent crackdowns by Beijing. Might US NFPs offer some relief to AUD/USD? Get your weekly AUD forecast from @ddubrovskyFX here: https://t.co/LQzQymM3ND https://t.co/XOCJl3vbu1
  • $AUDNZD closed at its lowest since December 2020 Prices pierced the 1.0541 - 1.0564 support zone, exposing the November low at 1.0418 A confirmatory downside close under support next week may open the door to further losses #AUD #RBA https://t.co/mybbgPHNX4
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out https://t.co/c51s3IBcEu https://t.co/k49UosZOUR
  • The US Dollar seems to be losing its momentum against ASEAN currencies as of late. Could this be another top in USD/SGD, USD/THB, USD/PHP and USD/IDR? Find out from @ddubrovskyFX here:https://t.co/rVBKBuhhAb https://t.co/lTT6oelIEc
US Dollar May Rise as Data Flow Drives Rethink of Fed Policy Bets

US Dollar May Rise as Data Flow Drives Rethink of Fed Policy Bets

Ilya Spivak, Head Strategist, APAC
USD 2-Hour Chart

US DOLLARFUNDAMENTAL FORECAST: BULLISH

  • US Dollar gains as Fed’s Powell unpacks updated policy framework
  • On-trend core inflation clashes with dovish shift in rate hike outlook
  • Incoming news may fuel rebound as ‘data dependence’ is established

Gain confidence in your US Dollar trading strategy with our free guide!

The US Dollar fell for a third consecutive week, succumbing to weakening yield- and haven-based appeal as priced-in Fed rate hike prospects fizzled while risk appetite recovered. Futures markets now predict the central bank will forego tightening altogether in 2019. Meanwhile, the bellwether S&P 500 index has climbed to the highest in a month.

A snapshot of weekly performance obscures what looks to be a critical change in the underlying fundamental narrative however. Markets have been taken with the idea of a dovish turn in the consensus view on the FOMC policy-setting committee for some weeks. Last week, Chair Powell seemed to ratify the idea that – while a change in posture has indeed occurred – this does not imply commitment to a directional bias.

POWELL CHECKS DOVISH TURN IN FED POLICY OUTLOOK

In fact, this seems to be the substance of the adjustment. In the decade following the Great Recession, the Fed sought to reassure markets with policy stability by telegraphing its moves well in advance. With the stimulus withdrawal process underway in earnest and the so-called “neutral” rate in sight, officials have moved into fine-tuning mode: dispensing with pre-commitment and adopting a nimbler approach.

Speaking at the Economic Club in Washington DC on Thursday, Mr Powell spelled out in the clearest terms yet that this need not be inherently dovish. He once again acknowledged a plethora of potential headwinds including trade tensions with China, shaky European politics and the ongoing US government. Critically however, he asserted none of these have materially soured incoming economic data flow.

The Greenback offered a telling response, rising alongside bond yields as the priced-in policy path implied in Fed Funds futures edged away from recent dovish extremes. More of the same followed as December’s CPI report underscored Powell’s point on the very next day. The headline price growth reading ticked lower courtesy of a slump in crude oil, but the core measure held reassuringly on-trend at 2.2 percent.

US DOLLAR EYEING BARRAGE OF ECONOMIC DATA

The calendar is loaded with economic activity data in the coming week. Figures on inventories, retail sales, industrial production, housing starts and building permits are all due. The University of Michigan will also update its US consumer confidence gauge. If traders have finally onboarded what the Fed is saying, the expectation of open-minded data dependence might see any of these stoke outsized volatility.

US economic news flow has sharply improved relative to consensus forecasts since the calendar yearturn. That suggests the setting of analysts’ models has been much too pessimistic, opening door for continued outperformance on incoming releases. That may well prompt a deep rethink of the markets’ no-hike 2019 policy view, setting the stage for the US Dollar to recover.

--- 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 Weekly Fundamental Forecasts:

Australian Dollar Forecast –Australian Dollar Cannot Bank On Trade Headline Support

Oil Forecast –Fed-Induced Crude Oil Price Rise at Risk as China, US Demand Ebbs

British Pound Forecast –Brexit Vote on Tuesday Will Not End the Current Bedlam

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

DISCLOSURES