1 Dec 2014
Expect volatility in USD ahead of the Fed speech and monthly jobs report - DBS
FXStreet (Barcelona) - The DBS Research team notes that the US dollar will be watching out for volatility from Fed speeches and the monthly US jobs report on Friday, and that we may see disappointing NFP data for November.
Key Quotes
“The US dollar, as measured by the DXY index, closed last week and month at 88.356, within striking range of its post-2008 crisis highs. The DXY has yet to end any day above 88.405 and 89.292, its highest closes seen in June 2010 and March 2009 respectively. The rise in the DXY since mid-2014 has been driven by the Eurozone and Japan seeking to beat deflation with ultra-loose monetary policies targeted at weakening their exchange rates.”
“Speculators remain committed to their “strong USD” trades, but are also staying vigilant of any shift in the landscape that may trigger an aggressive short-covering in the one-sided global currency market.”
“On the other side of the equation, the US dollar will be watching out for volatility from Fed speeches and the monthly US jobs report on Friday. New York Fed President William Dudley will be speaking on the US economic outlook tonight, while Fed Vice Chairman Stanley Fischer will touch on the central’s bank role in the global economy. These are two of the most senior officials that steer the Fed’s policy.”
“Interestingly, USD bulls have been betting on Fed hike expectations to bolster the greenback. Ironically, US bond yields have been retreating on the view that a higher USD may eventually force the Fed to delay its plan to normalize monetary policy. With initial jobless claims rising steadily in the first three weeks of November, many are also wary that nonfarm payrolls may also disappoint.”
Key Quotes
“The US dollar, as measured by the DXY index, closed last week and month at 88.356, within striking range of its post-2008 crisis highs. The DXY has yet to end any day above 88.405 and 89.292, its highest closes seen in June 2010 and March 2009 respectively. The rise in the DXY since mid-2014 has been driven by the Eurozone and Japan seeking to beat deflation with ultra-loose monetary policies targeted at weakening their exchange rates.”
“Speculators remain committed to their “strong USD” trades, but are also staying vigilant of any shift in the landscape that may trigger an aggressive short-covering in the one-sided global currency market.”
“On the other side of the equation, the US dollar will be watching out for volatility from Fed speeches and the monthly US jobs report on Friday. New York Fed President William Dudley will be speaking on the US economic outlook tonight, while Fed Vice Chairman Stanley Fischer will touch on the central’s bank role in the global economy. These are two of the most senior officials that steer the Fed’s policy.”
“Interestingly, USD bulls have been betting on Fed hike expectations to bolster the greenback. Ironically, US bond yields have been retreating on the view that a higher USD may eventually force the Fed to delay its plan to normalize monetary policy. With initial jobless claims rising steadily in the first three weeks of November, many are also wary that nonfarm payrolls may also disappoint.”