The Greenback Takes a Hit After Thursday’s Rally
- Overview: The US Dollar (USD) experiences a decline on Friday, breaking a streak of five consecutive trading days of gains, following a rally led by President Trump that saw the Greenback reach its highest level this year on Thursday.
- Fed Chairman’s Surprise: Fed Chairman Jerome Powell’s remarks on Thursday, where he highlighted the strength of the economy and healthy job market, have led to doubts over the possibility of another interest-rate cut by the US Federal Reserve (Fed) in December.
- Market Reaction: The US Dollar index falls back to the mid-106 level, facing potential further selling pressure as traders engage in profit-taking.
The USD retreats despite traders scaling back expectations of a December rate cut by the Fed. Powell’s comments have cast a shadow over the likelihood of further monetary easing, impacting global equities and diminishing hopes for a favorable year-end scenario.
Daily Market Movements
- Powell’s Impact: Powell’s unexpected stance has triggered speculation among traders and strategists, with doubts emerging about the possibility of a December rate cut.
- Upcoming Events: Key market drivers include the release of US Retail Sales data for October, with the health of the US consumer crucial ahead of the holiday shopping season.
Key Events for the Day:
- US Retail Sales for October at 13:30 GMT
- New York Empire State Manufacturing for November at 13:30 GMT
- Industrial Production for October at 14:15 GMT
Additionally, speeches from Federal Reserve Bank officials will provide further insights into the economic outlook and monetary policy stance.
US Dollar Index Technical Analysis
The US Dollar Index (DXY) is showing signs of a minor pullback, despite Powell’s comments favoring the Greenback. The divergence in monetary policies between the US and the European Central Bank (ECB) could support the USD as a high-yielding currency against its counterparts.
Key Levels:
- Resistance: 107.00, 107.35
- Support: 105.93, 105.53
US Dollar Index: Daily Chart
US Dollar FAQs
Learn more about the US Dollar and its impact on the global economy:
- USD Overview: The USD is the most traded currency globally, backed by the Federal Reserve’s monetary policy decisions.
- Monetary Policy: The Fed’s interest rate adjustments play a crucial role in determining the USD’s value.
- Quantitative Easing: QE is a tool used by the Fed in times of financial crisis, affecting the USD’s strength.
- Quantitative Tightening: QT is the opposite of QE and can influence the USD positively.
Stay informed about the latest developments in the financial markets to make informed investment decisions.