US Dollar Weakens after Powell's speech

Weekly Report - 27/08/2018

Dollar U.S. Dollar Weakens after Powell's speech


The U.S. Dollar was volatile the past week against most of the major currencies as traders reacted to political, economic and Fed news before going lower. The greenback started the week with much pressure. Some of the selling was affected by dovish comments from FOMC member Raphael Bostic. He said on Monday that he believes that relatively tame inflation warrants only one more rate hike in 2018. In the late Session a comment by President Trump send the market lower into the close. The US President criticized Fed policy.

The Week that was

Brexit negotiations were on focus last Tuesday and the UK released the no-deal impact analysis documents. This week, we can expect more noise coming in that will not only influence the Pound, but also UK equities. About the US-China Trade war as we expect, there was no real progress from low-level talks between the two countries on Wednesday and Thursday last week. The U.S added an additional 25% tariffs of $16bn Chinese goods at the end of the week. China’s response to the latest tariffs will probably set when the two leaders meet face to face. Turkey was on holiday for most of last week. We can expect that the government will start working hard to begin delivering the markets with fiscal and monetary policy plans to address inflation and the slide in the Turkish Lira., The concerns about the possibility of an economic meltdown will still be one of their highest priorities. Powell stated that gradual rate hikes are probably the best way to protect the U.S. economic recovery and keep job growth as strong as possible and inflation under control.


Main Focus This Week

A lot of US economic data is coming in this week with key stats including August consumer confidence numbers on Tuesday, the second estimate GDP numbers on Wednesday and the much anticipated FED’s preferred July Core PCE Price Index figures and personal spending numbers on Thursday. All that together with August PMI numbers out of Chicago and finalized consumer sentiment figures on Friday. The US and China trade war will be in most investor’s agenda. The EUR also has a busy week ahead. The consumer confidence figures out of Germany and the business sentiment on Monday and Tuesday also the French GDP numbers on Tuesday, the Germany employment numbers on Wednesday and August prelim inflation figures out of Spain, France, Germany, Italy and the Eurozone through the week to also influence.


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