Today’s Spotlight Market
The currency markets have been extremely choppy in recent weeks, as traders digest ECB and BoE decisions and await next week?s FOMC meeting. The central bank rate decisions from across the Atlantic have been mixed for the US Dollar. The most recent European Central Bank (ECB) policy statement did little in the way of actual policy, but the lack of discussion on extending current quantitative easing made the statement appear hawkish. This could be seen as slightly Dollar bearish. This morning, the Bank of England decided to hold interest rates steady, but many believe the statement from the bank is a telegraph that it will lower interest rates sooner rather than later.
Fundamentals
There is a slew of economic data this morning, including claims data, retail sales and PPI. This is the last retail sales report ahead of next week?s FOMC meeting and can be seen as especially important. If retails sales remain lackluster ? the consensus is -0.1% from July ? the Fed may be extremely hard pressed to raise rates in September. The street is also looking for a very mild PPI report, with traders looking for 0.1%. This is well below the Fed?s target and one can make the case for a continuation of a low interest rate environment. If numbers come in near expectations, it would be difficult to see the Fed raise rates next Wednesday, which can be viewed as negative for the Dollar Index.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the cash US Dollar Index continuing to consolidate between the 94.00 and 96.00 levels. The Dollar Index could remain range-bound for the foreseeable future, as there are no technical signs pointing to a possible breakout the oscillators are giving neutral readings. The momentum indicator, is, however, showing some positive divergence from the RSI, which can be seen as slightly positive in the near-term.
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