The odds of a FED hike this year continue to diminish harming their credibility and weakening the US Dollar. You can track exchange rates at any time here.
Recently all USD traders have been continuing to try and second guess the FED and their decision on when to raise interest rates. It seems that the commentary from the FED continue to remain inconclusive, switching from dovish to hawkish and back again on a regular basis. Historically they stated that the decision would be “data dependent” but they have made no change when unemployment hit its target and inflation showed improvements too.
It is becoming increasingly obvious that they are undecided as to when the right time may be, if they raise rates there will be a violent stock market sell-off, whereas pushing the decision back suggests that there is a deep-rooted problem with their economy.
It has been commented that we could now only see one more hike at the end of this year which could be the last that we see for the next 18 months and these views have a continual impact on the value of the dollar.
This week focus remains on the UK vote on their EU membership moving forward at the end of the week. This is impacting global risk appetite and therefore a consideration for anyone with a currency exposure. The voting polls open on Thursday so expect a turbulent market from Thursday afternoon onwards as everyone tries to price the most likely outcome into the market.
Outside of the UK news, watch out for US Services figures on Tuesday and Housing data on Wednesday. The Service sector for the US has been showing a contraction recently so expect this to follow suit resulting in the USD becoming cheaper to buy on the day. The housing sector has also been under some pressure so again anyone with USD to buy may see these events as a potential opportunity to get a better price. Please however remain aware any updates on the UK decision could have a quick and dramatic impact on market values.
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