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The Dollar’s Underlying Trend Resumes

Saturday, February 11, 2017 22:58
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B4INREMOTE-aHR0cHM6Ly8xLmJwLmJsb2dzcG90LmNvbS8tei1vdDg5dHVEVWMvV0ozSEdDT2ZyUEkvQUFBQUFBQUFYRzAvdGxzN2hGU3ByNWM2bDdGemUteC1KZXZ1ZzFBWUxyOWRnQ0xjQi9zNDAwL2luZmxhdGluZyUyQmRvbGxhci5naWY= / by Marc Chandler / Feb 11, 2017

For the last several weeks, we have been looking for the dollar correction that began around the Fed’s rate hike in the middle of December to be completed and for the uptrend to resume.  The precise timing of the turn is difficult to get right, but our view is anchored by our macroeconomic assessment and is understanding of the key drivers.
Our technical work suggests the dollar indeed has been carving out a bottom, and we expect the uptrend to resume.  Our confidence would be raised if we saw confirmation in other markets. For example, the Fed funds futures imply (slightly) less of a chance of a hike in March and June from a week ago.  It would also be helpful if the next string of data (CPI, retail sales, and industrial output) would be stronger than expected, as the median forecasts are all for softer numbers.
We suggest a few considerations helped solidify the dollar’s bid.  First, regardless of some disappointing data (wage growth, January auto sales, the first estimate of Q4 GDP), the Fed officials that spoke still seemed confident in the economy and the appropriateness of a gradual increase in interest rates.  Second, it seems as if Trump’s talking the dollar down was not the start of some campaign but likely his blustering style.  He reportedly asked the National Security Adviser about whether it is a weak or stronger dollar that is best for America.  He also indicated that the issue of currency manipulation was not high on the agenda as he met with Japan’s Prime Minister Abe.


The post The Dollar’s Underlying Trend Resumes appeared first on Silver For The People.


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