CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

fed minutes to boost the dollar

Article By: ,  Senior Market Analyst
May 22, 2019 9:43 AM
The minutes relate to the FOMC at the beginning of May. Fed Chair Jerome Powell was less dovish than the markets had been expecting, as he downplayed the chances of a rate cut. This less dovish tone could be echoed in the minutes, especially given that the FOMC was prior to the recent escalation in US – Sino trade tensions

We expect the minutes to highlight the Fed’s belief that weak inflation is transitory We also expect the minutes to reiterate the Fed’s patient stance. 

Since the meeting two weeks ago the pictured has changed and concerns have grown over the potentially negative impact that the escalating US – Sino trade dispute could have on the US and global economy. Going forwards the Fed could look to cushion this by cutting rates. According to the CME Fedfund the markets are now pricing in 100% probability of a rate cut before the end of the year.

Why is dollar still king?
So why is the dollar advancing even as the market is pricing in a great probability of a rate cut? Basically, the dollar continues to be the best of a bad bunch. The pound is under pressure from Brexit, the euro from weak growth across the eurozone. The Aussie and the Kiwi are both out of favour owing to the trade war and lower interest rate expectations. The yen’s appeal has been lifted thanks to its safe haven status, although is limited thanks to its ultra-low interest rate.
One of the narratives impacting the other currencies needs to change in order for the dollar to change its course. 

Levels to watch
The dollar index is currently trading at the higher end of its recent range and around the key 98.00 level. A meaningful move above this level could see the dollar test resistance at 98.33. On the downside support can be seen at 97.26 before 96.75. 



StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024