Dovish Fed Narrative Plays On

The dollar fell Friday to a 32-month low against the euro in Asian trading—the euro nearly topping $1.21—while it hit another 10-month low versus the yen, at ¥107.62. That compares with around $1.1865 and ¥110.25 at the end of last week.

A litany of factors is putting fresh pressure on the dollar. Doubts that the Federal Reserve has the firepower, or the will, to raise interest rates again this year, given soft inflation, only grew when the country’s fourth-largest city was flooded by a massive hurricane—and with the prospect of an even-stronger storm cutting through the length of Florida, the country’s third-biggest state by population.

Given the economic devastation left by Hurricane Harvey in Texas and the potential for more from Irma in Florida, a rate increase in the near term would be “politically incorrect,” said Stephen Innes, head of trading in Asia at forex broker Oanda in Singapore.

The Wall Street Journal

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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes