Breaking News
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

No Surprises From The Fed: Dollar Continues To Rise

By Kathy LienMarket OverviewNov 08, 2018 15:25
No Surprises From The Fed: Dollar Continues To Rise
By Kathy Lien   |  Nov 08, 2018 15:25
Saved. See Saved Items.
This article has already been saved in your Saved Items

Daily FX Market Roundup: 11.08.18

By Kathy Lien, Managing Director of FX Strategy for BK Asset Management.

Twenty-four hours after the US Midterm Elections and dollar bulls are back in control. The greenback traded higher against most of the major currencies and was unfazed by the Federal Reserve’s monetary policy announcement. To no one’s surprise, the Fed left interest rates unchanged, described the economy and the labor market as strong and said they see further gradual increases to interest rates. There was no mention of the deterioration in data with policymakers describing household spending growth as strong even though core retail sales stagnated in September. This unambiguously positive outlook is a signal of the central bank’s commitment to raising interest rates. There’s no doubt that the Fed will hike in December, especially if stocks maintain their current recovery. While USD/JPY only rallied slightly toward resistance at 114, EUR/USD dropped to 1.1373 quickly. With FOMC and the US Midterm Election no longer posing a threat to the dollar’s rally, currencies that enjoyed strong recoveries this month could see more profit taking on Friday.

Support in EUR/USD is at 1.13. A smaller than expected German trade surplus and the Bundesbank’s warning that the German economy may have stagnated in the third quarter made the euro one of the day’s worst-performing currencies. Although we firmly believe that the lower euro will bolster inflation and growth, the recent slide in oil prices could make it a slow move higher. The momentum has shifted back to the downside and as there are no major US and Eurozone economic reports scheduled for release on Friday, the path of least resistance for the pair should be lower.

For sterling, the main focus is Brexit. The European Union convenes on November 23 to discuss Britain’s exit from the European Union and according to a Times political report, an agreement could be made as early as next week. There’s apparently a draft being circulated around and if it is well received by the EU, it could be published on Tuesday or Wednesday of next week. Of course, none of this could be true or the EU could simply find the draft unsatisfactory and they’ll be back at status quo. Sterling traders will be skeptical until a deal is announced but once it is, we could see a very strong rally that could take GBP/USD all the way up to 1.34.

All 3 of the commodity currencies moved lower Thursday with the New Zealand dollar leading the slide. Having traded sharply higher over the past month, NZD/USD is beginning to lose momentum now that the 2 major events (Q3 labor data and RBNZ) are behind us. The RBNZ left interest rates unchanged Wednesday and boosted its inflation forecast but NZD/USD traders were not satisfied by Reserve bank of Governor Orr’s comments. While he said that their rate outlook has not changed, they are not taking a rate cut off the table because it has been a challenge to lift inflationary pressure further and if GDP falls short of forecast, they may have to resort to easing. Regardless of how serious the RBNZ is, the talk of rate cuts should be enough to take NZD/USD to 67 cents on US dollar strength and profit taking alone. The Australian dollar also turned lower but not until late in the day. The same was true of the Canadian dollar, which collapsed into the NY close pushing USD/CAD up toward 1.32.

No Surprises From The Fed: Dollar Continues To Rise

Related Articles

FactSet Research Systems Inc
Podcast: Evergrande, US Futures, Central Banks in Focus By FactSet Research Systems Inc - Sep 23, 2021

US futures are indicating a higher open as of 05:00 ET. Central banks in focus with Norges Bank, SNB, and BoE policy announcements this morning, following the FOMC announcement...

No Surprises From The Fed: Dollar Continues To Rise

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email