This morning USD has had heaving selling. USD has seen a series of multi-week highs & the best of the US data this week has just been released with all better than expected. Momentum has really gathered pace on the downside with the DXY ($ index) having taken out 94.00
The USD has taken another dip in response to the speech from FED chair Jerome Powell who sees a good reason to expect the US economy to continue strengthening. However, the market seems to be suggesting a lack of conviction as Powell also says that gradual rate hikes will be appropriate ‘if’ growth stays strong. Given the Fed minutes are expectations being contained a little in view of the rate path assumed by the market?
Fed Minutes Maintain Expectations Of Rate Rise, But Caution On Slower Growth In H2
Today’s minutes have not thrown up any major surprises for the rare path, as the FOMC deems it appropriate to tighten soon, though as ever, on a gradual basis for the path as a whole. Consequently, the odds of a hike in September have risen to 94%, while Dec is also a touch higher now at 55%. Potential hazards are seen, which point to downside risk revolve around trade, with the US not seen as entirely immune to the tariff wars. The minutes also highlighted risks on housing and emerging markets - the latter prominent with the crisis in Turkey leading to outflows elsewhere.
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