Greenback Fights Back to Finish a Tough Week
It’s been a pretty tough week for the dollar with first the political fall out from Trump Jnr’s Russian e-mail revelations and then a more dovish Fed Chair adding pressure to the greenback. However, we did see some signs of a bit of fight in the greenback overnight as the dollar index came back better bid to finish the day at 95.80.
The IMF had a crack at the Cad overnight by announcing that they are concerned with the Canadian housing market, and warned there could be trouble if the BoC were to continue too aggressively with rate hikes. This had little effect on the Cad but officially signals a real issue that most OECD countries will have as we enter this part of the interests rate cycle. Canada, like many western nations, has experienced record house price inflation in major centers during this low interest rate environment and central banks will have to tread carefully to avoid bursting any bubbles.
The week is by no means over and we have some good tier 1 data out of the US tonight but traders will want a bit of time to digest all that’s occurred this week and contemplate the longer term affects on the currencies. Especially as we move into the holiday season and liquidity falls off a touch. The key outcome of the week is that the Fed has indicated that rather than looking through weak data their concerns are mounting with low inflation numbers and are fully aware that they are falling short of their 2% target. Futures are now predicting only 2 0.25 bps rate increases in the next 2 years.
This leads on to tonight’s US CPI data which will again add colour to the picture for a Fed rate hike by then end of the year. The market is expecting a 0.1% increase after a disappointment of -0.1% last month. We also have retail figures out at the same time which will keep traders busy trying to digest the information to finish the week.
Good Luck trading today and if you have any queries or questions, please contact us at firstname.lastname@example.org
The Rakuten Securities Australia City Challenge:
Once again, as it’s Friday we’re making the city challenge just a bit harder but offering double the normal prize $50 for the first correct answer to email@example.com
Each day our daily FX Insight comes out with a different city featured in the title picture. We are offering 25 Aud each day for the first FX Insight reader that contacts us at firstname.lastname@example.org with the correct identity of that day’s city. This amount will be added to the winners trading account, if you don’t have a trading account one of our friendly staff will of course be happy to assist you in setting one up!!
Thursday’s City: San Francisco