The U. S. Dollar is Still Strong (Weekly Review)

2018-09-11
The US dollar remains fairly strong, but it was able to show the strongest position only when paired with the Euro. The British pound received tangible support thanks to the news of a possible breakthrough in the negotiations of the UK with the European Union over Brexit, but pessimism regarding the "soft" exit remains, and the GBP attempts to grow are still used for sales. Thus, the bulls failed to break through the psychological mark of 1.3000 paired with the USD, and it completed the week for the 29th figure. Nevertheless, progress in the negotiations could trigger a fairly large-scale GBP rally.

Taking into consideration trade wars between the United States and its trading partners, and in particular China, and the increased likelihood of a trade war with Japan, last week such "safe havens" currencies as the Japanese Yen and the Swiss Franc were subject to moderate demand as well. The US president confirmed readiness to introduce next import duties on Chinese goods worth $ 200 billion, and also expressed readiness to continue in the same spirit, if necessary. In general, selling dollar against these currencies is unlikely to look justified, so sellers should be extremely cautious.

A good reason for the continued positive dynamics of the U. S. Dollar is the continued tightening of the monetary policy by the US Federal Reserve System. US statistics do not give reason for the Fed to take a long pause, while it has no reason to accelerate the rate of interest rate increase, so the positive impact of this factor may come to naught. We should also take into account the risks arising from trade wars and the US economy, as well as the fact that the wars can still force the Fed to take a long pause, therefore, bulls in the USD should not forget about caution in the medium term.

Schedule for this week:

Monday, September 10
08:30 GMT – United Kingdom. Trade Balance;
08:30 GMT – United Kingdom. GDP;
08:30 GMT - United Kingdom. Industrial Production;
08:30 GMT - United Kingdom. Manufacturing Production;
11:00 GMT - United Kingdom. NIESR Gross Domestic Product (GDP) Estimate (QoQ) (Aug);
12:30 GMT – USA. The U.S. Federal Open Market Committee (FOMC) Member Bostic Speaks;
19:00 GMT – USA. Consumer Credit.

Tuesday, September 11
01:30 GMT – Australia. National Australia Bank Business Confidence;
02:15 GMT – PRC. Foreign Direct Investment (FDI) (YoY) (Aug);
08:30 GMT - United Kingdom. Average Earnings Index +Bonus (Jul);
08:30 GMT - United Kingdom. Average Earnings ex Bonus (Jul);
08:30 GMT - United Kingdom. ILO Unemployment Rate (3M) (Jul);
09:00 GMT – Germany. ZEW Current Conditions;
09:00 GMT – Eurozone. Employment Rate;
12:15 GMT – Canada. Housing Starts;
12:55 GMT – USA. The Redbooк Index.

Wednesday, September 12
00:30 GMT – Australia. Westpac Consumer Sentiment;
09:00 GMT – Eurozone. Industrial Production;
12:30 GMT – USA. Producer Price Index (PPI);
18:00 GMT – USA. The Federal Reserve's Beige Book.

Thursday, September 13
23:50 GMT – Japan.  Foreign Investments in Japanese Stocks;
23:50 GMT – Japan. Foreign Bonds Buying;
01:00 GMT – Australia. MI Inflation Expectations;
01:30 GMT – Australia. Unemployment Rate;
01:30 GMT – Australia.  Employment Change;

01:30 GMT - Australia. Participation Rate;
07:00 GMT – Germany. Harmonised Index of Consumer Prices (HICP);
07:30 GMT – Switzerland. Swiss National Bank Monetary Policy Statement;
11:00 GMT – United Kingdom. Bank of England (BOE) Interest Rate Decision;
11:00 GMT - United Kingdom. BoE Meeting Minutes;
11:00 GMT – United Kingdom. Monetary Policy Report;
11:45 GMT – Eurozone. ECB Interest Rate Decision;
12:30 GMT – Eurozone. European Central Bank Press Conference;

12:30 GMT – Canada.  New Housing Price Index;
12:30 GMT – USA. Consumer Price Index (CPI);
12:30 GMT - USA. Core Consumer Price Index (CPI);
12:30 GMT - USA. Initial Jobless Claims;
18:00 GMT - USA. Federal Budget Balance.

Friday, September 14
02:00 GMT – PRC. Industrial Production;
02:00 GMT – PRC. Retail Sales;
04:30 GMT – Japan. Industrial Production;
09:00 GMT – Eurozone. Trade Balance;
10:00 GMT – United Kingdom. Bank of England (BOE) Governor Mark Carney Speaks;
12:30 GMT - USA. Retail Sales Ex Gas/Autos;
12:30 GMT - USA. Retail Control (Aug);
13:15 GMT - USA. Capacity Utilization Rate;
13:15 GMT - USA. Industrial Production;
14:00 GMT - USA. Michigan Consumer Sentiment Index;
14:30 GMT – Canada. Bank of Canada (BOC) Review.

Author: Anthony Porter, IAFT Analyst

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