Currency Traders Focus On Tomorrow?s FOMC Minutes
Today’s Spotlight Market
The US Dollar Index continues to trade in a sideways pattern on the daily chart, largely due to lackluster economic data and signs that the Fed has pushed back their timeline on rate hikes.? Currency traders were really banking on rate increases, which has resulted in the grind we have seen in the greenback since mid-March.? Traders are anxiously awaiting the FOMC minutes slated to be released tomorrow afternoon to give more insight into the central bank?s internal discussion over rate hikes.? Also, the minutes will give traders a better idea as to what data the Fed is zeroing in on to determine whether an increase in interest rates is warranted.?? Today?s and tomorrow?s price action could be choppy and traders probably should not read much into it.
Fundamentals
The US Dollar has faced some headwinds from poor jobs data, which may result in the Fed pushing their timetable on rate hikes back a little bit.? Non-farm payrolls for March disappointed, tallying a 126,000 increase versus the estimate of 245,000.? The silver lining in the report is that wages did increase a little bit.? While some traders are concerned that this could be the start of a pattern of weaker job growth, many expect March?s weak job creation to be a one-off event. The economy could bounce back from the cold weather and West Coast port strikes, which affect more jobs than simply at the ports.? At the same time, European economic data has slightly surprised, which may improve the outlook for the Euro currency.? The recent inflation report showed deflation decreasing, suggesting the ECB?s quantitative easing program may have a smaller scope than previously expected.? While consumers certainly have reaped the rewards of a stronger greenback in the form of cheaper fuel and more expendable income, multinational companies may not fare as well.? The stronger currency has made exports a bit more expensive and may have a negative effect on corporate profits. This also could have a negative impact on the job market if multinationals freeze new hires or lay workers off as a result. ?
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the March Dollar Index trading in a triangle/wedge pattern since March.? Given the preceding move higher, this could have a slight upside bias for a possible breakout.? Recent price action has resulted in the March contract falling below the 20-day moving average, suggesting a near-term high may be in place.? Prices have tested and initially held the 50-day moving average.
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