USD continues to dominate its rivals

Aside from the Euro, the USD is continuing to extend its gains against its main trading partners on Monday. This is occurring despite the announcement moments ago that personal spending declined more than forecast in January, which could also open up the possibility for another downward GDP revision if consumer spending refuses to pick up this month. Questions are being asked why, despite the consistently strong employment reports, we are yet to see this translate into actual consumer spending. Moreover, the economic release provides further reason for the Federal Reserve to delay raising interest rates until later this year because if it does hike rates earlier, consumers may spend even less.

Some might also ask why the USD is continuing to drive higher against its counterparts, with this basically being because of the complete divergence of monetary policy between the US Federal Reserve and everywhere else. After the People’s Bank of China (PBoC) eased monetary policy over the weekend, the divergence in sentiment between the United States and elsewhere has stood out even further to traders. At a time when so many central banks are shifting stance and unexpectedly easing monetary policy, optimism that the Federal Reserve will still be raising US interest rates at some point this year is enough to support the USD uptrend.