Subscribe to RSS

US Dollar Volatility Near-Guaranteed, but Which Direction?

US Dollar

Fundamental Forecast for Dollar: Neutral

  • Euro rallies on S&P 500 tumbles, but is the Euro truly a new safe-haven currency? (Hint: no.)
  • Stocks surge ahead of key Jackson Hole Summit—what might we expect?
  • Look at real-time FX positioning data via our Speculative Sentiment Index

It was a difficult week for traders as the initial US Dollar breakdown left many (including us) looking for further losses. The Euro/US Dollar first saw its largest three-day advance in six years, but instead of continuing higher it subsequently posted its largest three-day decline since 2011. Such choppy price action made it near impossible to keep any real conviction in market direction or a lasting trading bias. A big week of economic event risk and the new month may nonetheless add clarity for the US Dollar and broader financial markets.

Traders should first watch for any surprises out of a highly-anticipated central banker symposium in Jackson Hole, Wyoming. US Federal Reserve Vice Chair Stanley Fischer will deliver a speech on inflation on Saturday, while Bank of England Governor Mark Carney and European Central Bank Vice President Vitor Constancio will also issue statements at the annual summit.

The critical question remains whether the US Federal Reserve will raise interest rates at its September meeting, and Fischer’s commentary will draw special scrutiny as US Dollar traders attempt to anticipate the Fed’s next moves. It was only two weeks ago that interest rate futures predicted a 60 percent chance of a September hike. Yet those same futures now show an implied 40 percent probability—a big reason why many traders may have rushed for the exits on their Dollar trades.

The next big question is how major global central banks will react to the recent bout of financial market volatility. To that end we’ll watch planned commentary from the BoE’s Carney and the ECB’s Constancio for clues on potential policy responses. We should also note that unplanned comments from other major central bank officials at the summit could likewise force big moves in key assets.

Beyond Jackson Hole, markets will turn to highly market-moving US Nonfarm Payrolls data on Friday for the next clues on US Federal Reserve interest rate moves. The US central bank is fairly unique as its mandate states it must pursue policies of maximum employment while controlling inflation. Recent market volatility and potential knock-on risks to global growth may already make Fed officials less likely to raise rates. But a disappointing US labor market report could sound the death knell for the possibility of a September rate hike.

The possibility of major surprises from global central bankers or US NFPs has pushed 1-week FX volatility prices near multi-month peaks, and the next several days promise to force meaningful shifts across financial markets. The fact that the Euro rallied and the Dollar tumbled as the S&P 500 sold off led many to claim the Euro was a new “safe-haven” currency. We think the opposite is true, but any renewed market turmoil could in fact lead more traders to dump USD-long positions and force Euro rallies. It will be critical to watch how markets open the week and begin trading into the first days of the new month.

0 commentsback to post

Add your comment

Nickname:
E-mail:
Website:
Comment:

Other articlesgo to homepage

Get 20% Bonus Make $100 Deposit or More – FirewoodFX

Get 20% Bonus Make $100 Deposit or More – FirewoodFX(0)

20% Forex Bonus Make $100 Deposit or More. Bonus can be used as additional margin and equity If you deposit $500, you can hold a losing position up to $600 Link: 20% Bonus Make $100 Deposit or More Available to: All new and existing Bonus Ending Date: 31 December 2017 Bonus offer: 20% Bonus Make

150% Bonus for a First Time to Binary Trading – NordFX

150% Bonus for a First Time to Binary Trading – NordFX(0)

Up to 150% Bonus for a First Time to binary options Account. For a perfect start, we offer you a 150% bonus for a first-time $5,000 deposit. Link:  Up to 150% Bonus for a First Time Link:  100% Withdrawable Deposit Bonus Link:  55% Deposit Bonus Promotion Available to: All new traders Ending Date: 31 December

100% Welcome Bonus Plus Daily Free Signals – Trade12

100% Welcome Bonus Plus Daily Free Signals – Trade12(0)

Get 100% Welcome Deposit Bonus and 7-day risk free trade, Boost your trading with a free 100% Welcome Deposit Bonus to your Live Trading Account. Link:   Get 100% Welcome Bonus Link:  50% Exclusive Deposit Bonus Link:  Free Daily Forex Trading Signals Available to: All new clients Ending Date: 31 December 2017 Bonus Offer: Get

25 Euro Forex No Deposit Welcome Bonus – direktbroker-FX

25 Euro Forex No Deposit Welcome Bonus – direktbroker-FX(0)

25 Euro Forex No Deposit Welcome Bonus to all EU and the UK  live Trading Account Holder. Open a real account direct instead of an demo account first and you will get a 25,- Euro Free. Link:  25 Euro Free Welcome Bonus Available to: All new account Ending Date: 31 December 2017 Bonus offer: 25

Up to $250 Cash in Your Expert Advisor – ThinkMarkets

Up to $250 Cash in Your Expert Advisor – ThinkMarkets(0)

Up to $250 Cash in Your Expert Advisor. Make the Move to Think Trader and Cash in Your Expert Advisor for Up to $250* Link:  Up to $250 in Your Expert Advisor Available to: All new account Ending Date: 31 December 2017 Bonus offer: Up to $250 Cash in Your Expert Advisor Bonus to all new

$30 Forex No Deposit Bonus Welcome Promo – XM

$30 Forex No Deposit Bonus Welcome Promo – XM(0)

$30 Forex  No Deposit Bonus Welcome Promo Bonus and 15% Welcome Deposit Bonus, Welcome Bonus brings Real Account clients the best rewards available. Entering the markets and trading with XM enables you to earn from your trades and build your own bonus up to a maximum of $1,000. Link:  $30 Forex No Deposit Bonus Link: 

50% Re-Deposit & 100% Tradable Bonus – Xtream Forex

50% Re-Deposit & 100% Tradable Bonus – Xtream Forex(0)

50% Re-Deposit Tradable Forex Bonus for all of its traders. Every existing and new trader is eligible for this Re-Deposit Tradable Bonus for depositing into their trading account. Link:  100% Tradable Deposit Bonus Link:  35% Deposit Cash Bonus Link:  50% Re-Deposit Forex Bonus 50% Re-Deposit Forex Bonus XtreamForex is glad to announce 50% re-deposit forex

Free $50 No Deposit Bonus and Start Trading – Trade360

Free $50 No Deposit Bonus and Start Trading – Trade360(0)

$50 Forex No Deposit Bonus is available only once for each client. Every verified user can use $50 No Deposit Bonus and get one or several investment accounts. Link:  $50 Forex No Deposit Required Bonus Link:  $280 CashBack Rewards Program Available to: All new account Ending Date: 31 December 2017 Bonus offer: $50 New No

200% Cashback Rebate Bonus up to $10000 – ForexTime

200% Cashback Rebate Bonus up to $10000 – ForexTime(0)

200% Forex Cash back Rebate Bonus up to $10,000, whether they’re first time depositors or returning clients. and get $4 Cashback back for every lot you trade. Link:  Loyalty Cashback Promotions Link:  200% Cashback Rebate up to $10000 Ending Date: 31 December 2017 Available to: All Customers Bonus Offer: ForexTime Rewards Loyalty in Withdrawable Cashback

$50 Free No Deposit Credit Bonus Promotion – GDMFX

$50 Free No Deposit Credit Bonus Promotion – GDMFX(0)

$50 No Deposit Credit Bonus Promotion 2017 to all new account. The $50 no-deposit bonuses is available for clients who open their first registration with GDMFX Link: $50 No Deposit Credit Bonus Promotion Available to: All new account Ending Date: 31 December 2017 Bonus offer: $50 No Deposit Credit Bonus Promotion 2017 to all new account.

read more

Forex Featured Broker

Contacts and information

ForexDepositNews.com Forex Deposit Bonus, Forex No Deposit Bonus, Forex Live Contest, Forex Demo Contest, Free Forex Bonus Forex Brokers Review and Other All Forex promotions.

ForexDepositNews.com

Social networks

Most popular categories