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On Monday, the evergreen buck kept diving for a third day in a row versus its counterparts on soaring bets the Federal Reserve will press the pause button on its rate lift cycle in the near months.
Despite firm monthly American jobs data for December the previous week, financial analysts are assured that the world's number one economy is actually losing momentum with Fed Chair Jerome Powell's remarks contributing to expectations that the US major financial institution might adopt a milder outlook.
On Friday, Fed Chair revealed to the American Economic Association that the major bank isn’t on a preset path of interest rate lifts and that it’s going to be quite sensitive to the downside risks financial markets are actually pricing in.
Versus a basket of its counterparts, the evergreen buck went down 0.25% hitting 95.92, which is close to a 2-1/2 month minimum recorded the previous week.
Soaring expectations that the major US bank is going to suspend its rate lift cycle is putting pressure on the greenback and that will be a crucial factor in the nearer future, as some market experts pointed out.
The evergreen buck managed to outperform other currencies last year because of the major US bank being the only key financial institution to lift interest rates. If the Federal Reserve holds interest rates this year, market experts see a slim likelihood of further greenback appreciation. This year, financial markets expect no more rate lifts from the major US bank.
Meanwhile, the common currency and the Australian dollar became the top performers, with the latter also deriving benefits from the weekend news of soaring policy stimulus in China.
The Australian dollar managed to surge by 0.5% trading at $0.7140.
The evergreen buck surged by 0.2% against the offshore Yuan reaching 6.8483.
Last week several important economic updates influenced the Forex market. US preliminary GDP fell less than expected (0.6% actual vs. 0.7% forecast). Below you will find the key events to trade on during the week from August 29 to September 2.
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Main news that will drive the market in the upcoming week include CB Consumer Confidence Index, Canadian GDP, and US Core PCE Price Index
The Federal Reserve (Fed) will announce its Interest Rate Decision and make a statement about the future monetary policy on Wednesday, September 21, GMT+3. After the higher-than-expected inflation numbers published on September 13, there’s almost no doubt the Federal Reserve will come up with another 75-basis-point rate hike. However, surprised by the CPI numbers, several Fed members announced the possibility of a 100-basis-point rate hike on Wednesday.
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