The Federal Reserve speeds up its quantitative tightening, and this is certainly bullish news for the USD. At the same time, this is a negative factor for the American stocks, which have entered their seasonally worst month.
US dollar: forecast for Dec. 18-22
The Federal Reserve raised its benchmark interest rate by 25 bps and said that it expects to make 3 further rate hikes in 2018. The rate increase, however, didn’t help the USD much. There are several reasons for the greenback’s weakness. Firstly, the market was totally ready to such move and it was already in the dollar’s price. Secondly, the Fed expressed concern about low inflation and pledged to monitor this indicator. Finally, the next important meeting of the central bank will take place only in March, that’s why the USD bulls were not very active.
Another negative factor came from the hurdles to the US tax reform. There are reports that two US Republican senators tried to change the proposed legislation. As the Republicans’ majority in the Senate is shaky, there are worries which hurt the American currency. In the end, though, most people believe that the reform will go through.
At the same time, there were some good news for the dollar. US retail sales rose two times more than expected, while unemployment claims posted the second lowest reading since 1973.
In the coming days, America will release building permits, current account, home sales, durable goods orders, core PCE price index and other data. These releases may offer some decent trading opportunities.
Technically, the US dollar index was held back by resistance in the 94.20 area and now looks vulnerable for decline to 93.00 and 92.50. A fix above 94.20 is needed to open the way up to 95.00.
Last week the speech of the Fed's Chair Jerome Powell led to big swings in the market. The USD jumped, while EURUSD and GBPUSD revisited lows. Gold and US500 also got under pressure.
The gold has made a perfect retest, but will it hold against the rising dollar? Also, the Jackson Hole Symposium and Jerome Powell's speech may become critical for most assets, and finally, more economic releases and earnings reports await you.
Although the last week was intense, this one may be more dynamic and volatile. After the FOMC meeting and controversial decisions from the Bank of England, we saw a historical pound decrease, and the gold plunge. And there’s even more for you.
After the US CPI last week came out above the forecast, traders started expecting a 75-basis point rate hike…
In this video, we will talk about the potential change of a trend in the euro, another stock rally amid a global downtrend, gold prospects, and news that shakes the world right now. It’ll be a helpful video you don’t want to miss.