The main event for USD in the past week was the Federal Reserve’s September meeting. The central bank reduced QE to $15B a month and aims to end this program of asset purchases in October. Although on the outside the Fed is still cautious about the labor market, it’s making small hawkish adjustments to its policy stance. Janet Yellen stays on track she adopted in Jackson Hole: she admitted that the actions of the Fed will depend on America’s economic performance. USD bulls hope that the economic recovery will allow raising rates earlier.
The FOMC members raised their expectations for the interest rate in the coming years. Have a look at this chart. It’s called ‘the Fed dots’ – each dot shows at which level one of the FOMC members expects to see the key interest rate in future. The Fed seems ready to raise rates next year. Apparently this was enough to make the USD feel good.
The Fed’s message was to watch the US economy. Next week pay attention to the American housing data like existing & new home sales, durable goods orders and final Q2 GDP. There will also be some speeches from the Fed’s officials – Dudley & Kocherlakota. These two are doves, and it would be quite interesting to hear their opinion.
The overall picture for dollar is positive. Note, though, that the risks of correction in USD have increased, especially versus euro and yen.
The FOMC members raised their expectations for the interest rate in the coming years. Have a look at this chart. It’s called ‘the Fed dots’ – each dot shows at which level one of the FOMC members expects to see the key interest rate in future. The Fed seems ready to raise rates next year. Apparently this was enough to make the USD feel good.
The Fed’s message was to watch the US economy. Next week pay attention to the American housing data like existing & new home sales, durable goods orders and final Q2 GDP. There will also be some speeches from the Fed’s officials – Dudley & Kocherlakota. These two are doves, and it would be quite interesting to hear their opinion.
The overall picture for dollar is positive. Note, though, that the risks of correction in USD have increased, especially versus euro and yen.
Recommended Content
Editors’ Picks
AUD/USD dips below 0.6600 following RBA’s decision
The Australian Dollar registered losses of around 0.42% against the US Dollar on Tuesday, following the RBA's monetary policy decision to keep rates unchanged. However, it was perceived as a dovish decision. As Wednesday's Asian session began, the AUD/USD trades near 0.6591.
EUR/USD lacks momentum, churns near 1.0750
EUR/USD cycled familiar levels again on Tuesday, testing the waters near 1.0750 as broader markets look for signals to push in either direction. Risk appetite was crimped on Tuesday after Fedspeak from key US Federal Reserve officials threw caution on hopes for approaching rate cuts from the Fed.
Gold wanes as US Dollar soars, unfazed by lower US yields
Gold price slipped during the North American session, dropping around 0.4% amid a strong US Dollar and falling US Treasury bond yields. A scarce economic docket in the United States would keep investors focused on Federal Reserve officials during the week after last Friday’s US employment report.
Solana FireDancer validator launches documentation website, SOL price holds 23% weekly gains
Solana network has been sensational since the fourth quarter (Q4) of 2023, making headlines with a series of successful meme coin launches that outperformed their peers.
Living vicariously through rate cut expectations
U.S. stock indexes made gains on Tuesday as concerns about an overheating U.S. economy ease, particularly with incoming economic reports showing data surprises at their most negative levels since February of last year.