Recovery in Forex Markets Back on Cards for the US Dollar

James West
dollar on forex background

The greenback managed to see some upward movement on Wednesday after the expectation of interest rate cuts from the Federal Reserve weakened somewhat.

The move came after political interference from US President Donald Trump, who is arguing that rate cuts will stimulate the economy.

However, the Federal Reserve’s Chair Jerome Powell responded to this by reminding the world that the bank is independent from the executive in the US.

A speech from James Bullard, who is President of the Federal Reserve bank of St Louis and who is widely considered to be one of the most pro-cut bankers on the Federal Open Market Committee, described the potential outcome of a 0.5% rate cut as “overdone”.

The developments meant that the US dollar rose against the safe haven Japanese yen by a quarter of a percentage point.

The dollar index, which tracks the currency compared to six others, rose – and went above the 96 point, which it had sailed below earlier in the week.

With the middle point of the forex trading week now here, it’s important to keep an eye on the economic calendar to see what is on the cards in the coming days.

Today (Wednesday) there will be some durable goods orders data for May out of the US at 12.30pm GMT. This is expected to show a change from its past position of -2.1% to +0.2%.

Nondefense capital goods orders (excluding aircraft) for the month of May will be released out of the US at 12.30pm GMT too. This is predicted to show a change from -1% to +0.1%.

Later in the afternoon at 3.30pm GMT, all eyes will continue to be on the US when Mary Daly, who is the head of the San Francisco Federal Reserve Bank, will speak.

The day will be rounded off by a series of data releases from Japan. Retail trade figures for May, for example, will be out at 11.50pm GMT. These are expected to show a shift from 0% to -0.6%.

Looking ahead to the early hours of Thursday, the Bank of Japan’s Deputy Governor Masazumi Wakatabe is set to speak at 1.30am GMT.

Over in Europe, business climate data for June for across the European Union will be out at 9am GMT. It is expected to show a change from 0.3 down to 0.23 – a development which, if it transpires, may harm the euro’s recent spell of strong performances.

A preliminary harmonised index of consumer prices for June is due out of Germany at 12pm GMT. This is forecast by analysts to hold firm at 1.3%.

Initial jobless claims will also be released out of the US tomorrow at 12.30pm GMT for the days surrounding June 21st. This is expected to show a slight rise from 216,000 to 220,000. Continuing jobless claims for the preceding week are also expected at that time. These are expected to show a similar rise, this time from 1,662,000 to 1,665,000.

US gross domestic product information will complete a trio of key releases scheduled into this slot. The release, annualised and covering the first quarter of 2019, is expected to show no change from 3.1%.

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