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
  • 🇺🇸 Markit Manufacturing PMI Flash (SEP) Actual: 60.5 Expected: 61.5 Previous: 61.1 https://www.dailyfx.com/economic-calendar#2021-09-23
  • Heads Up:🇺🇸 CB Leading Index MoM (AUG) due at 14:00 GMT (15min) Expected: 0.7% Previous: 0.9% https://www.dailyfx.com/economic-calendar#2021-09-23
  • Bank of England left policy measures unchanged as expected with the Bank Rate remaining at 0.1% and gilt purchases at GBP 875bln.Get your $GBP market update from @JMcQueenFX here:https://t.co/px04sJbCuq https://t.co/uwJLHi8YGL
  • $USD pulling back from that Sept high that was set after FOMC yday price action still messy, but a semblance of support around the 93 handle $DXY https://t.co/8HqX3fqvEI
  • Heads Up:🇺🇸 Markit Manufacturing PMI Flash (SEP) due at 13:45 GMT (15min) Expected: 61.5 Previous: 61.1 https://www.dailyfx.com/economic-calendar#2021-09-23
  • Citi bring forward BoE rate hike forecast to Feb 2022 with a 15bps hike and 25bps in May $GBP
  • 🇺🇸 Jobless Claims 4-week Average (SEP/18) Actual: 335.75K Previous: 336.5K https://www.dailyfx.com/economic-calendar#2021-09-23
  • 🇺🇸 Initial Jobless Claims (18/SEP) Actual: 351K Expected: 320K Previous: 335K https://www.dailyfx.com/economic-calendar#2021-09-23
  • 🇺🇸 Continuing Jobless Claims (11/SEP) Actual: 2845K Expected: 2650K Previous: 2714K https://www.dailyfx.com/economic-calendar#2021-09-23
  • 🇺🇸 Chicago Fed National Activity Index (AUG) Actual: 0.29 Previous: 0.75 https://www.dailyfx.com/economic-calendar#2021-09-23
US Dollar Forecast: FOMC Minutes to Detail Tapering Debate

US Dollar Forecast: FOMC Minutes to Detail Tapering Debate

Rich Dvorak, Analyst

US DOLLAR OUTLOOK – FOMC MINUTES, RETAIL SALES, YIELDS IN FOCUS

  • US Dollar bears sent the broader DXY Index recoiling -0.3% lower last week
  • Inflation, consumer sentiment data weighed negatively on Treasury yields
  • FOMC minutes due for release could reinvigorate Fed hawks and USD bulls

The US Dollar weakened broadly and dragged the DXY Index -0.3% lower on balance this past week. This erased about half of the gains notched post-NFPs and leaves the broader US Dollar up 0.4% month-to-date. Recent selling pressure across USD price action largely follows disappointing economic data in the eyes of Fed hawks. Specifically, month-over-month inflation decelerated from 0.9% in June to 0.5% in July. CPI slowing gave some credibility to the Fed’s transitory inflation narrative, which in turn, sparked an unwind of Fed taper bets and US Dollar strength.

US DOLLAR INDEX PRICE CHART WITH TEN-YEAR TREASURY YIELD OVERLAID

US Dollar Index Price Chart with Ten Year Treasury Yield Overlaid

Chart by @RichDvorakFX created using TradingView

US Dollar weakness accelerated further during Friday’s trading session as markets digested the latest consumer sentiment report. Largely fueled by concerns about the delta variant of covid, the headline consumer sentiment index plunged from 81.2 in July to 70.2 in August. That marks the seventh largest decline on record and leaves consumer sentiment at the lowest reading since 2011. Treasury bond yields tumbled in response and dragged the US Dollar along for the ride. The ten-year Treasury yield dropped a noteworthy 8-basis points, for example, to 1.28%.

That said, where the US Dollar heads next likely hinges on how Treasury yields react to the upcoming release of FOMC minutes and retail sales data. FOMC minutes from the July 27-28 Fed meeting, which ultimately tweaked “substantial further progress” language in the press statement, stands to provide some color on the Fed taper debate and whether or not central bank officials have any appetite for slowing asset purchases before year-end. Retail sales data, on the other hand, could shed light on the degree that deteriorating consumer sentiment has impacted spending habits.

-- Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

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

DISCLOSURES