Dollar surges as markets prepare for central bank week

Frank Walbaum

Important news this week

Mon, 14th, 14:30 CET CA Consumer Price Index.
Tue, 15th, 08:00 CET UK Claimant Count Change.
Wed, 16th, 20:00 CET US FOMC Interest Rate Decision.
Thu, 17th, 13:00 CET UK BoE Interest Rate Decision.
Fri, 18th, JP BoJ Interest Rate Decision.

Dollar surges as markets prepare for central bank week

The US Dollar is rising sharply as markets increasingly expect the Fed to hike rates from 3.75% to 4.0% on Wednesday. Stocks are weakening as higher rate expectations weigh on risk appetite, while the AUDUSD is fading and now approaches the key 0.7130 level. A break below could signal further risk-off pressure.

Gold and Silver remain relatively flat despite the stronger Dollar. If risk sentiment continues to deteriorate, safe-haven demand could provide additional support for the precious metals. Oil is slightly higher as the Houthis extend fighting, keeping geopolitical risks in focus.
The Yen is losing some of its recent strength against other currencies, although JPY remains an important focus with the BoJ decision coming on Friday. The DAX is currently stable but could also come under pressure if the weakness in US indices continues.

Market talk

Wednesday's FOMC decision is the most important event; a hawkish tone could provide further support for the dollar and put additional pressure on stocks. A less aggressive Fed could trigger a reversal in the USD and provide relief for risk assets.
The BoE follows on Thursday, while the BoJ takes centre stage on Friday. The Yen has remained strong despite some recent fading, so the BoJ's communication will be closely watched for signs of how policymakers view the currency and the possibility of further policy tightening. With the AUDUSD now testing 0.7130, US indices under pressure and the DAX vulnerable to a further decline, the reaction to this week's central-bank decisions could set the tone for the broader market.

Tendencies in the markets

Equities weaker, USD stronger, crypto positive, oil strong, metals weaker, JPY sideways.

Author

Frank Walbaum

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