This is a US dollar year because there is no output gap, unlike other majors, and fiscal stimulus remains in the pipeline. An occasional check on the USD at this stage of the global cyclical upswing is absent and that is a broadening of the US deficit with its trading partners. Economics is really worth studying because the surprising strength of the USD this year is quite predictable in today's circumstances. US trade policy is in direct and forceful conflict with US monetary policy.
US dollar stronger again with notable yen weakness continuing
The impact of prospective higher US inflation rippled through markets yesterday as the US dollar surged higher in the afternoon. The higher than expected US Producer Prices Index (PPI) comes ahead of today’s consumer prices data, the CPI, which is expected to tick towards 2.9% but given the surprise in producers data, could have a 3 handle for the first time since 2011. This has fuelled expectation that the Fed will indeed need to push ahead with two further rate hikes this year. It is interesting to see though that this dollar strength comes with the bond markets remaining subdued and are not driving the move in the greenback. Longer dated ... (full story)
- Posted: Jul 12, 2018 3:47am
- Submitted by:Category: Technical AnalysisComments: 1 / Views: 1,508