Hope you have had a great week and a beautiful trading month so far. This is going to be a Major week for 2018 for most fx traders to give us clear direction on the Us Dollar. Platinum Analysts believe that the Yellen speech will be full of optimism due to the current nature of market confidence and the latest set of figures. We are looking for 25 basis points hike in March, June and September meetings.
The trading system seems to be on autopilot for buying the dips and I would like to share five major forecasts that we had given to Platinum Traders on the 4th of January.
PLATINUM ANALYSTS’ PREDICTIONS FOR JANUARY 2018
The dollar index is in a Key Decision Area! The Chart Says it All
USD Faces Selling Pressure, Drops for the 7th week consecutively
The currency failed for the 7th week consecutively against some of the leading global currencies. This has been the longest period of time that the US Dollar has witness loss in more than thirteen years. At the beginning of 2014, the USD continued to record gains for 3 continuous years even as the Federal Reserve tightened its policy whereas the currencies the other G10 countries remained behind.
The US Dollar added almost 37% after the Federal Reserve started tapering Quantum Easing purchases of the asset at the start of 2017. Ever since, both the policy-making officials as well as the traders are treading cautiously with regard to an upcoming hike in the rate of interest. Both the market as well as the officials have come to realize that the rate would be hiked anywhere between 2-3 times in 2018. After this fact has been firmly established, traders are now shifted the focus of their speculations elsewhere. In fact, they’re now hoping that a broader global pick up and growth will likely push other countries and their central banking institutions to imitate Fed’s move. In view of the diminishing yield ratio between other foreign currencies as well as the USD, especially given that the Federal Reserve’s policy in itself is discounted, has further resulted in the outflow of capital from the USD to other non-US Dollar alternatives.
As far as the future developments are concerned, the Federal Open Market Committee’s policy related announcement shall be passed without any support even as the officials focus on managing the exchange of chair between Janet Yellen and Jerome Powell. At present, the bets on policy are so firm that the announcement of the ISM as well as nonfarm payrolls figures that usually moves the market will have to dramatically deviate away from the forecasts in order to gain enough attention. That would shift the focus of the investors on other developments. Outside of the United States, there have been certain signals that the markets could have reached out too far. The BOC, the ECB as well as the BOJ that are looking forward to delivering updates around their policies in January are planning to push back against any speculation that they’re considering a major hawkish shift in their respective policies. On the other hand, weak CPI report from New Zealand is indicating towards the fact that the Reserve Bank of New Zealand won’t be lifting their interest rates at all.
The Bank of England’s Governor may also be looking to support the officials who’re not in the favor of an aggressive policy tightening as and when he interacts with the Parliament’s Treasury Select Committee next week. According to the experts at the Platinum Academy, the USD may find some support if the news on the domestic front is positive. This may encourage the Fed to hike the rate fourth time in the year. On the other hand, the USD may gain some strength only when the prospect for external monetary tightening retreats.
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