I know that most traders here focus primarily on the technical aspect, but for those that trade from a fundamental POV ...
... what is your take on the current sentiment surrounding the dollar? Long-term, the dollar's downward spiral that started in March last year came to an abrupt end during the week of Thanksgiving. The last two months, we've seen dollar strength grow incredibly against most other currencies.
Recently, it's no secret that the market has been in a state of risk aversion, and fundamental factors such as China's monetary tightening, Obama's bank threats, and now the carry trade controversy (among other things) have all contributed to increasing risk aversion, which has boosted the dollar to new highs. Comparatively, the Euro has been getting progressively weaker, compunded by the EU's debt and growth issues as well as the Greece drama.
Not the least of which to add to the pro-dollar sentiment was the FOMC's latest release last weak, signaling a more hawkish outlook on U.S. recovery and hinting that a rate hike might be closer than anticipated.
So the question is ... where does this put the dollar?
Do you believe that positive data from the upcoming Pending Home Sales would raise dollar value or raise stocks, equities, bonds, etc? Because some have speculated that in the current market, either bad or good U.S. news data would strengthen the dollar, suggesting that good data would be fundamentally strong for the dollar because it further indicates recovery (and pressures the FOMC for a rate change), while bad data would cause global risk aversion sentiment, and being the low-yielding reserve currency, the dollar would still benefit.
Don't know how accurate this assessment is.
But the consensus right now seems to be that even with the bank rate decisions happening this week, the biggest market mover will still likely be Friday's Non-Farm Employment Change report.
Do you believe a better-than-expected NFP number would help or hurt the dollar, given the current market? Historically, the market has almost always reacted fundamentally to the NFP (meaning the dollar would benefit in the end from positive NFP data), and given where the market is now, I would also be inclined to think that a positive NFP would hold the same effect on the dollar (positive) as Friday's strong GDP release.
In theory, positive data from any other country at this point would promote risk appetite and hurt the dollar, while negative data from any other currency would cause investors to retreat TO the dollar and avoid risk.
However, the question is what the effect of U.S. data will have on its own currency, the greenback?
A very high GDP number on Friday strengthened the dollar greatly (and hurt stocks), while the dollar has traded lower today even though this morning's ISM PMI far exceeded expectations (and the stock market has traded higher). Just what the hell is going through the mind of the market right now?
... what is your take on the current sentiment surrounding the dollar? Long-term, the dollar's downward spiral that started in March last year came to an abrupt end during the week of Thanksgiving. The last two months, we've seen dollar strength grow incredibly against most other currencies.
Recently, it's no secret that the market has been in a state of risk aversion, and fundamental factors such as China's monetary tightening, Obama's bank threats, and now the carry trade controversy (among other things) have all contributed to increasing risk aversion, which has boosted the dollar to new highs. Comparatively, the Euro has been getting progressively weaker, compunded by the EU's debt and growth issues as well as the Greece drama.
Not the least of which to add to the pro-dollar sentiment was the FOMC's latest release last weak, signaling a more hawkish outlook on U.S. recovery and hinting that a rate hike might be closer than anticipated.
So the question is ... where does this put the dollar?
Do you believe that positive data from the upcoming Pending Home Sales would raise dollar value or raise stocks, equities, bonds, etc? Because some have speculated that in the current market, either bad or good U.S. news data would strengthen the dollar, suggesting that good data would be fundamentally strong for the dollar because it further indicates recovery (and pressures the FOMC for a rate change), while bad data would cause global risk aversion sentiment, and being the low-yielding reserve currency, the dollar would still benefit.
Don't know how accurate this assessment is.
But the consensus right now seems to be that even with the bank rate decisions happening this week, the biggest market mover will still likely be Friday's Non-Farm Employment Change report.
Do you believe a better-than-expected NFP number would help or hurt the dollar, given the current market? Historically, the market has almost always reacted fundamentally to the NFP (meaning the dollar would benefit in the end from positive NFP data), and given where the market is now, I would also be inclined to think that a positive NFP would hold the same effect on the dollar (positive) as Friday's strong GDP release.
In theory, positive data from any other country at this point would promote risk appetite and hurt the dollar, while negative data from any other currency would cause investors to retreat TO the dollar and avoid risk.
However, the question is what the effect of U.S. data will have on its own currency, the greenback?
A very high GDP number on Friday strengthened the dollar greatly (and hurt stocks), while the dollar has traded lower today even though this morning's ISM PMI far exceeded expectations (and the stock market has traded higher). Just what the hell is going through the mind of the market right now?
