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22 May 2015
Why the rally in the greenback on "more or less" in-line CPI's? - FXStreet
FXStreet (Guatemala) - Valeria Bednarik, chief analyst at FXStreet noted that the dollar stands victorious this week, having accelerated its advance on Friday on the back of stronger-than-expected inflation readings in the US.
Key Quotes:
"Furthermore, the FOMC released the Minutes of its latest meeting, saying that most of the voting members see a rate hike in June as "unlikely." But the dollar came back like a vengeance on Friday,after the release of inflation figures."
"Were the numbers that bright actually? In fact, not: The CPI increased 0.1% in April on a seasonally adjust basis against prior 0.2% and fell 0.2% against an expected decline of 0.1%. The core reading, excluding food and energy, matched the previous reading of 1.8% yearly basis, whilst the monthly reading improved to 0.3% from previous 0.2%."
"So why is the dollar rallying so sharply? Because we like it or not, the US is the only major economy in the path of tightening its economic policy, whilst the rest continues to struggle with decisions of whether or not extending their stimulus programs."
"And while a June rate hike may be "unlikely," investors are quite convinced that the year won't end without US rates getting a lift."
"During the upcoming week, the market will pay special attention to Durable Goods Orders to be released on Tuesday, housing data scheduled for Tuesday and Thursday, but it won't be until Friday, with the first revision of Q1 GDP that the market will get a clearer picture regarding rates."
"Anyway, keep in mind that dollar dips, as long as hopes for a rate hike sometime this year subsist, are just buying opportunities, particularly against currencies which Central Banks are looking to keep stimulus up."
Key Quotes:
"Furthermore, the FOMC released the Minutes of its latest meeting, saying that most of the voting members see a rate hike in June as "unlikely." But the dollar came back like a vengeance on Friday,after the release of inflation figures."
"Were the numbers that bright actually? In fact, not: The CPI increased 0.1% in April on a seasonally adjust basis against prior 0.2% and fell 0.2% against an expected decline of 0.1%. The core reading, excluding food and energy, matched the previous reading of 1.8% yearly basis, whilst the monthly reading improved to 0.3% from previous 0.2%."
"So why is the dollar rallying so sharply? Because we like it or not, the US is the only major economy in the path of tightening its economic policy, whilst the rest continues to struggle with decisions of whether or not extending their stimulus programs."
"And while a June rate hike may be "unlikely," investors are quite convinced that the year won't end without US rates getting a lift."
"During the upcoming week, the market will pay special attention to Durable Goods Orders to be released on Tuesday, housing data scheduled for Tuesday and Thursday, but it won't be until Friday, with the first revision of Q1 GDP that the market will get a clearer picture regarding rates."
"Anyway, keep in mind that dollar dips, as long as hopes for a rate hike sometime this year subsist, are just buying opportunities, particularly against currencies which Central Banks are looking to keep stimulus up."