Strong US data support the dollar
Because of the weekend in the United States on Monday, trading on global markets were calm. Asian investors were winning back the Friday performance J.. Yellen growth of the US dollar against the Japanese yen. And so, in general, the dollar traded in different directions and without significant changes.
But on Tuesday the market will return US investors, and the situation has the potential to change, as is still the focus of the market is the idea of further enhancing the US Federal Reserve interest rates. Recall that on Friday, John. Yellen indicated that it expects to raise rates in the next few months, and that everything will depend on incoming economic data, which means that the publication this week of a number of performance indicators, as well as the figures for employment will play an important role in the decision of the Federal Reserve on interest rates at the June meeting.
If you published this week will prove to be positive, in other words, will show an increase over the previous figures, it could push the Fed to act decisively and “force” them to raise interest rates by another 0.25%. The only limiting factor may be the only uncertainty with the vote on the UK’s membership of the EU. But Yellen on Friday did not mention about the problem, which may indicate that it can not influence the decision on interest rates.
Evaluating the prospects of the currency market, but rather the behavior of the US dollar, you will notice that even after the publication of strong data this week, one hundred percent probability of a rate hike there. Most likely, the market will continue to keep a low profile, although in this case the dollar will most likely grow up. And only the fact of the result of the meeting will have a strong impact on the markets. There is also important to note that it will be presented to the adjusted forecasts of the Central Bank on the situation in the labor market, inflation and expectations for interest rates, their dynamics and level. It is no less important issue than the fact of increase or rate hikes. Earlier this winter, lowering expectations for interest rates, inflation, and was followed by comments from the Federal Reserve that it is necessary to slowly raise them, had a strong influence on investor sentiment. This led to the realization of the market, the CB makes a pause in the growth rates. even opinions began to appear on the market, this pause may be delayed until the end of the year, but the protocol April meeting will put everything in its place and the expectations on rates in June and in general this summer have grown strongly.
From the data published today doubtless attract the attention of figures on employment in Germany and the euro zone, as well as consumer price inflation in the euro area. Disclosure of the value of Canada’s GDP for the first quarter will have an impact on the Canadian currency. Of US economic statistics are interesting data on income, expenditure and especially Americans. Rising costs, and it is expected to be 0.7% in April against 0.1% in March, if not frighten, would be another signal for a possible rate hike in June. In addition, important will be the value of the consumer confidence index CB in May, the growth forecast to 96.0 points against 94.2 points and business activity (PMI) in Chicago, waiting for the growth rate to 50.9 points in May, compared with 50.4 points in April.
Sergey Nevsky, a currency strategist at IC Markets
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