The ongoing weak performance of the US economy has been pushing the greenbacks lower against the global market from the very beginning of the year 2017. The dollar bulls gained the strongest bullish momentum prior to the closing of the year 2016, as FED officials projected three rate hikes for the year 2017. Currently, the US Dollar Index, which is the measure of the overall value of the greenbacks’ strength against its major rivals, is trading at a 7 month low, and has found some decent support due to positive data release in the US unemployment claim. Though the current consumer sentiment is extremely negative, the optimistic dollar bulls are hoping for a strong rebound in the US dollar index from 94.00 marks. Most of the leading investors are currently waiting for the FOMC meeting minutes scheduled on Wednesday to get a clear clue regarding the next movement of the greenbacks. According to some leading economists an imminent rate hike in the present situation might have an adverse effect on the US economy, as borrowing costs will be higher.
Possible bullish reversal in US dollar index: The falling US dollar index has found some fresh buying pressure after it hit the critical low at 93.46 on Tuesday. Currently, all the investors are waiting patiently for the FED officials meeting minutes to get a general overview of the greenbacks’ strength. If the FED comes up with a clear statement than the investor’s community will get a clear hint regarding the monetary tightening policy of the FED. The slow movement of the current inflation rate has created doubt in the minds of leading economists about whether the FED will hike their interest rate for the third time this year.
Moreover, the recent failed effort to replace Obama Care has also created strong negative consumer sentiment. Furthermore, the US government has also been struggling to increase their fiscal spending to bring stability in their economy. Considering all these facts, investors are confused about whether the FED will hike their interest rate or not.
Currency market overview: Most of the major rivals are being traded higher in the global market from the very beginning of the year 2017 .Though FED has managed to hike their interest rate twice in this year, the ongoing weak performance in the US economy is pushing the greenbacks significantly lower in the CFD trading industry. The low yielding Japanese yen traded at 111.85 and secured a gain of 0.81% despite the ongoing economic crisis.
The EUR/USD pair traded at 1.1642 after it secured a high of 1.1711, a level not seen since August 2015. The Aussie dollar went down by 0.49 % and traded at 0.7890 after the release of the inflation data on the Aussie economy. The Great British pound traded higher in the global market but slipped at the early part of the Asian trading session due to the positive sentiment of the dollar bulls.
Summary: Most global investors are currently on the sidelines and cautiously waiting for the FOMC meeting minutes data so that they get a clear clue regarding the next rate hike decision by the FED. Though the ongoing economic crisis has created strong negative consumer sentiment, some investors are expecting another rate hike in the US economy. Though we have positive data release in the US unemployment claims the average hourly income of the US citizen has declined. Most of the major rivals are now trading higher against the greenbacks establishing a medium term bullish trend, but some investors are considering this as minor correction of the market.