Dollar Index

[ashif]

Dollar slips lower but remains close to 14-year peak


The dollar slipped lower but continued to hover near a 14-year peak against the other majors currencies on Thursday, amid sustained optimism over the U.S. economy and expectations for a December rate hike by the Federal Reserve.EUR/USD rose 0.30% to 1.0711, off Wednesday’s 11-month trough of 1.06651.


The greenback was boosted after Philadelphia Fed head Patrick Harker said on Wednesday that he was in favor of raising interest rates, while Cleveland Fed President Loretta Mester said the Fed must not overreact to market moves following the shock result of the presidential election.


The dollar also remained broadly supported by rising U.S. government bond yields and expectations for ramped up fiscal stimulus once Donald Trump becomes president.


Elsewhere, GBP/USD gained 0.24% to 1.2471 after the U.K. Office for National Statistics reported that retail sales increased 1.9% in October, compared to expectations for a 0.4% rise.


Year-on-year, retail sales climbed 7.4% last month, beating expectations for a 5.3% rise.

[ashif]

Dollar edges up, hovers near fresh 14-year peak.


The dollar edged up and hovered close to a fresh 14-year peak against the other majors currencies on Thursday, as strong U.S. data continued to boost optimism over the strength of the economy.


EUR/USD slipped 0.19% to 1.0671, just off Wednesday’s 11-month trough of 1.0663.


The U.S. Department of Labor said initial jobless claims in the week ending November 12 fell by 19,000 to 235,000, the lowest level since 1973. Analysts expected jobless claims to rise by 3,000 to 257,000 last week.


Separately, the Commerce Department said housing starts surged 25% in October to hit 1.323 million units, while building permits rose 0.3% to 1.229 million units.

[ashif]

Dollar trims gains but remains supported.


The dollar trimmed gains but remained broadly supported against the other majors currencies on Tuesday, as the release of strong U.S. data added to optimism over the strength of the economy.Official data showed that the second estimate of third quarter U.S. gross domestic product rose 3.2%, up from the initial reading of a 2.9% expansion.
Analysts were looking for a smaller upward revision to just 3.0%.In addition, the Conference Board said its consumer confidence index rose to 107.1 this month from a reading of 100.8 in October, whose figure was revised from a previously reported 98.6.Analysts had expected the index to increase to 101.2 in November.The upbeat data added to optimism over the outlook for the U.S. economy amid expectations that increased fiscal spending and tax cuts under the Trump administration will spur economic growth and inflation.The strong report also added to expectations that the Federal Reserve will decide to raise interest rates at its December policy meeting.

[ashif]

Dollar edges higher ahead of FOMC meeting likely to hike rate on Dec 14, to undertake two more rate hikes in 2017.


The dollar edged higher ahead of the start of the two-day FOMC meeting.The dollar index up 0.09% at 101.09.


It is widely expected that the central bank will increase the target range of the key interest rate by 25 basis points to 0.50-0.75 percent, with a unanimous decision, while making little change to the monetary statement, though the Committee is likely to acknowledge that market-based measures of inflation compensation have risen further.


With the economy seemingly close to ‘full employment’ there is a now a case for more hawkish guidance. A heavy sell-off in the U.S. Treasuries reflects concerns looser fiscal policy may cause the central bank to move more aggressively in the near future. Market is pricing two more hikes in 2017 from the Federal Reserve in the wake of Trump’s reinflation policies.


These hikes are expected to be a counter to curb rising inflation next year from government fiscal spending by increasing borrowing cost. Lastly, for now the Fed will probably not change its rhetoric, while it waits to see what fiscal policy measures are enacted.

[Yousuf Ali]

The main focus of todays session will remain the outcome of the FOMC as its importance is not so much the decision to deliver a 25bp rate hike - that result has been fully factored-in for some time - but for the message sent to the market by Chair Yellen's subsequent press conference.

We suspect that the Fed will continue with its long-held messaging of a gradual approach to further tightenings. As such they will aim to avoid market speculation of a faster pace of rate hikes and an underwriting of even higher long-end US T-yields. Indeed, there has already been a tightening of financial conditions via recent yield rises and a surging USD. That should motivate the Fed to adopt a cautious approach to its messaging.

[ashif]

Dollar index moves lower after Disappointing U.S. retail sales.

The dollar moved lower against the other majors currencies on Wednesday, weighed by the release of disappointing U.S. retail sales data and as investors awaited the Federal Reserve’s policy decision due later in the day.

The U.S. Commerce Department said retail sales ticked up 0.1% in November, disappointing expectations for a 0.3% gain.

Core retail sales, which exclude automobiles, gained 0.2% last month, compared to expectations for an increase of 0.4%.

A separate report showed that the U.S. producer price index rose 0.4% in November, beating expectations for a 0.1% uptick.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.25% at 100.83, the lowest since December 8.

[Yousuf Ali]

The USD staged a strong rally after the Fed hiked interest rates and signaled room for three more tightening moves next year, an increase from their September forecast of just two hikes. Policymakers also upgraded growth and jobs forecasts for next year. US retail sales came in weaker than expected for November while PPI readings beat estimates. US CPI, initial jobless claims, Empire State manufacturing index, and Philly Fed index are lined up today.

[Yousuf Ali]

An early preview of the first FOMC meeting for 2017 due next week on Jan 31 – Feb 1, with the policy decision due for announcement of Feb 1 at 1900GMT.
FOMC looks very likely to keep policy unchanged.
It will make only modest revisions to the post-meeting statement.
There will be some comments on economic activity, assuming GDP growth for Q4 is in line.
The committee will probably keep its description of inflation trends roughly unchanged, but it may acknowledge that headline PCE inflation should reach 2% relatively soon (instead of “over the medium term”)
We expect for the balance of risk assessment and the characterization of current policy to remain unchanged.
The statement will likely leave out any explicit mention of fiscal policy for the time being.

[ashif]

Dollar index pushes higher despite weak U.S. data.


The dollar pushed higher despite the release of disappointing U.S. jobless claims and housing sector data as investors paused amid ongoing concerns over Donald Trump’s policies.The U.S. Commerce Department said new home sales sank by 10.4% to 536,000 units last month, compared to expectations for a 1.0% drop to 588,000 units.


The report came after the U.S. Department of Labor said that initial jobless claims increased by 22,000 in the week ending January 21 to 259,000 from the previous week’s total of 237,000.


The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.65% at a four-day high of 100.56, off seven-week lows of 99.77 hit overnight.

[ashif]

Dollar edges lower ahead of Trump speech.


The dollar edged lower Tuesday ahead of U.S. President Donald Trump's address to Congress.The dollar index was off 0.06% at 101.08.The dollar had earlier advanced after Fed member Robert Kaplan said the FOMC should raise rates sooner rather than later.The odds of a March Fed hike increased to 33%.The market is waiting for further details on the Trump administration's plans for tax reform and infrastructure spending.Trump on Monday pledged to increase military spending and reduce expenditures in other areas.