Saturday 19 November 2016

Dollar has no doubt in the increase of the Fed's rate

The US currency continues to update the long-term highs against its competitors. After a short pause, the dollar "bulls" have intensified again and received new purchase driver. Markets regarded Thursday's rhetoric of Fed as "predatory" because J. Yellen warned about the risks of tightening with increasing rates and made it clear that the regulator will soon resume its tightening policy.
After receiving a new charge of optimism, USD sent euro to new yearly lows under the mark of 1.06, while the USD/JPY attacked the 110.00 barrier and at the moment is close to the next psychological level of 111.00. Despite overbought US currency, players can continue to open long positions due to positive expectations regarding future policy of Trump and the almost 100% probability of increasing the cost of credit in the last for this year meeting of the Federal Reserve.
Particularly deplorable is the situation with the pair EUR/USD. Here we must note the worsening divergence of monetary policies of two key Central Banks. If the state of the US economy justifies the policy tightening, as the Fed speakers do not tire repeating, the ECB intends to continue the stimulus. This intention has confirmed by the head of the European regulator M. Draghi. And in December, the ECB may decide to extend the program of buying assets, which expires in March next year, which promises the single currency further losses.
At the beginning of next week there will be another speech Draghi, and if his rhetoric will wear a pessimistic character with reference to the risks for the region, the EUR/USD may gain a firm foothold under the mark of 1.06 and go to a minimums from the beginning of December 2015 - the area of ​​1.0520.


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