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Abstract:The US Dollar may rise if the Fed meeting minutes and commentary at the Jackson Hole symposium spooks markets and boost demand for liquidity.
US DOLLAR FUNDAMENTAL FORECAST: BULLISH
US Dollar may gain on Fed meeting minutes, Jackson Hole symposium
Commentary and outlook may spook markets, boost demand for liquidity
Are investors once again overly optimistic on prospect of Fed rate cuts?
The US Dollar may rise next week if the publication of Fed meeting minutes along with commentary from the Jackson Hole symposium spook markets and drive demand for liquidity. The anti-risk Greenback may also capitalize on market-wide premonitions of an incoming recession as bond yields dive into negative territory and equities continue to show greater fragility against the backdrop of unstable geopolitics.
The headline risk will likely be the publication of Fed meeting minutes. Despite the most recent FOMC decision to cut rates by 25 basis points, the US Dollar emerged triumphant at the expense of equity markets. This is because Fed Chairman Jerome Powells commentary was less dovish than what markets had anticipated, which led to the fear that there may not be an abundance of rate cuts down the line.
US Dollar Continues to Climb Despite Mounting Fed Rate Cut Expectations
US Dollar charted created using TradingView
It is likely that the Fed meeting minutes will provide a more nuanced view of this and may cause investors to flock to the US Dollar. Strength in the Greenback may also be amplified by the Jackson Hole symposium if the outlook from officials spooks markets and drives demand for anti-risk assets. In times of uncertainty, a premium is placed on liquidity, and in this regard, the US Dollar reigns supreme.
S&P 500 chart created using TradingView
US DOLLAR TRADING RESOURCES
Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.
The U.S. Bureau of Labor Statistics revised down the employment growth in the year ending in March by 818,000, an average monthly decrease of about 68,000, the largest downward revision since 2009. The substantial downward revision of employment data re-emphasized the severity and necessity of the U.S. employment problem, paving the way for a rate hike in September. Bearish for the U.S. dollar.
Fed Governor Bowman: There are upside risks to inflation, the labor market continues to strengthen, and a cautious attitude will be maintained at the September meeting. Boston Fed President Collins: If the data is as expected, it would be appropriate to start easing policy "soon". Inflationary pressure will slow down the pace of U.S. interest rate cuts, which will be bullish for the dollar.
Recent developments include President Biden's potential re-election reconsideration, Asia-Pacific market highs, PwC's auditing issues in China, potential acquisitions in the energy and retail sectors, geopolitical tensions, and regulatory actions impacting markets. Key impacts include fluctuations in USD, CNY, CAD, TWD, EUR, GBP, and AUD, with significant effects on stock markets across the US, Asia, and Europe.
Recent developments include President Biden's potential re-election reconsideration, Asia-Pacific market highs, PwC's auditing issues in China, potential acquisitions in the energy and retail sectors, geopolitical tensions, and regulatory actions impacting markets. Key impacts include fluctuations in USD, CNY, CAD, TWD, EUR, GBP, and AUD, with significant effects on stock markets across the US, Asia, and Europe.