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

$25 Free Welcome Trading Gift to Start Trading – TRADE

$25 Free Welcome Trading Gift to Start Trading – TRADE(0)

Sign up and receive $25 Free Trading Welcome Gift to Start Forex Trading. $25 Free Forex Welcome Trading Gift by TRADE.com to trade forex live trading without any Deposit and investment to verify live account Link:  $25 Free Welcome Gift to Start Trading Available to: All new trading account Bonus offer: Sign up and receive

Stay Informed About Crucial BREXIT News – UFX Broker

Stay Informed About Crucial BREXIT News – UFX Broker(0)

How will BREXIT affect the value of the GBP? Could the EUR be affected, as well? Other European markets may see volatile market reactions as investors wonder how the UK may profit from its own market, rather than remain part of the EU’s single market. Stay Informed About Crucial BREXIT News with UFX Link:  Stay

Up to 444% Profit Receive for a Single Trade – Grand Capital

Up to 444% Profit Receive for a Single Trade – Grand Capital(0)

Up to 444% Receive Profit with our new Express Options for Grand Capital Ltd Binary Option Broker. Make a correct prediction for 3 assets at the same time Link: Up to 444% Profit Receive for a single trade Link:  $500 Forex No Deposit Welcome Bonus Link:  40% Forex Welcome Deposit Bonus Available to: All new

$6000 First Deposit Bonus Limited Time Offer – XTrade

$6000 First Deposit Bonus Limited Time Offer – XTrade(0)

Up to $6000 First Deposit Bonus Limited Time Offer (T&C applied) on all Deposits for all Customers. Become an XTrade customer, and get 60% Forex Special bonuses (T&C applied) on all deposits made during your first 7 days!! Link:  $50 Free Cash Welcome Bonus Promotion  (T&C applied) Link:  $30 Free Account Verification Bonus (T&C applied) Link: 

50% Deposit Bonus and $50 No Deposit Bonus – FortFs

50% Deposit Bonus and $50 No Deposit Bonus – FortFs(0)

$50 Forex No Deposit Bonus Promo Action to all eligible clients. Every client who passed the verification process in their trader’s room can get the $50 No Deposit Welcome Bonus Link:  $50 Forex No Deposit Welcome Bonus Link:  Up to 50% Bonus of Every Deposit Link:  15% Support Margin Bonus Promo Available to: New and

15% Forex Welcome Deposit Bonus Up to $1000 – XM

15% Forex Welcome Deposit Bonus Up to $1000 – XM(0)

15% Forex Welcome Deposit Bonus Up to $1000 and $30 Forex No 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

Free $200 Earn with Binary No Deposit Bonus – Ayrex

Free $200 Earn with Binary No Deposit Bonus – Ayrex(0)

Earn $200 Free with Binary Options No Deposit Bonus to all new activated trading account. Ayrex presents its very first Binary Options No Deposit Bonus for new traders. Sign up to get FREE $30 and turn them into a fully withdrawable $200! Link: $200 Earn with No Deposit Bonus Link:  $100 Free Win in Just One

$30 Free No Deposit Welcome Bonus Campaign – Tickmill

$30 Free No Deposit Welcome Bonus Campaign – Tickmill(0)

$30 Free No Deposit Welcome Bonus Campaign to All new traders. $30 Free Welcome Account is available to all new clients who expressed a wish for it during the registration process. Link:  $30 Free Welcome Bonus Offer Available to: All new traders Ending Date: 31 December 2017 Bonus Offer: $30 Free No Deposit Welcome Bonus

Get $2017 No Deposit Hot Bonus Promotion – FreshForex

Get $2017 No Deposit Hot Bonus Promotion – FreshForex(0)

$2017 No Deposit Hot Forex Bonus Offer to all new verified customers. The $2017 Hot No Deposit Forex Bonus offers you a unique opportunity to test trading strategies of FreshForex Link:  $2017 No Deposit Hot Bonus offers Available to: All New Traders. Ending Date: 30 April 2017 Bonus Offer: $2017 No Deposit Exclusive Hot Bonus

100% Real Money Cash Back Bonus Promotion – UFX

100% Real Money Cash Back Bonus Promotion – UFX(0)

100% Real Money CashBack Promotion 2018 to all new and existing clients. Join and gain exclusive access to the ONLY online trading 100% Cashback rewards bonus program Link:  100% Real Money CashBack Promotion Link:  $50 Forex No Deposit Bonus Promotion Available to: All new trading account Ending Date: 31 December 2017 Bonus offer: 100% Real

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