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Dollar Danger is to Trade Higher

Bernanke’s remarks this week on the US job market are being considered his most dovish stance to date. The reserve currency of choice chose to underperform, squeezing weaker shorts and managing to print a new medium EUR term high. Unless the market gets a sense that the Fed is contemplating another round of QE, then the dollar is not expected to weaken significantly from here. By stating that the problems troubling the job markets are ‘cyclical and not structural’ implies that policy stimulus can be effective at reducing the labor market slack. If however, the problems facing the US were structural in nature, then accommodative monetary policy would not necessarily be effective. Now that quarter and month end rebalancing has been completed, the market can get back to trading fundamentals. This week’s slew of global PMI’s could be setting the tone for the dollar a considerable period of time.

Below are some other highlights of the week:


Americas

 

EUROPE Week in FX

ASIA Week in FX [1]

 

WEEK AHEAD

  • A busy week of PMI reporting from GBP, USD and CAD
  • AUD, EUR, PLN and GBP Central Banks deliver their rate announcements
  • USD releases the FOMC minutes
  • Employment reporting comes from USD and CAD
  • Aussies give us Building approvals and Trade data points
  • Retail Sales is released by AUD and CHF
  • Inflation is noted in CHF
  • GBP has HPI and Manufacturing Production to deal with
  • Finally, the Kiwis report their Business confidence findings

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell [6]

Vice-President of Market Analysis at MarketPulse [7]
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

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