Traders are paying more attentions towards the dollar as the Fed will gain more attention once again this week. Theresa May will start her tour around the country in a bid to unite the country
Last week ended on bit of a high as the US markets were able to finish the week with minor gains. The dollar index has been the major focus and this is where investors have decided to pick up from this week. The index is under pressure because the Federal Reserve Bank decided to increase the interest rate last week. It is the failure of their hawkish outlook regarding the dollar which is causing the slide. This is the longest losing streak for the dollar since early November.
As we kick-start another week, investors will be looking towards a number of key events which can perhaps give them some clues about the current dot plot which is dictating the move for the dollar and treasury yields. The Fed’s stance regarding the gradual interest rate hike and the dot plot confirm so far that there may only be two more rate hikes for the dollar, and currently this is what traders are preparing for.
The key notes which will be delivered by the Fed chairwoman, Janet Yellen, will be of vital importance on Thursday. At the same time, a number of other Federal Reserve committee members will also be speaking this week and their outlook regarding the dollar will also be of equal importance. It is not acutely clear if the Fed has factored in the impact of the high spending infrastructure plan and lower taxes which have been promised by Trump.
In terms of economic data, fortunately for traders, it is not heavy and it is highly likely that the currency trend could prevail throughout this week. We do have durable goods orders data due Friday as well as the current account deficit number before that. Both economic numbers may not command too much importance among traders, but still, they may be able to push the dollar.
Our precious metal, gold, had its biggest weekly gain in a long time on the back of the Fed’s decision. Is there any further room positive territory for the precious metal? Certainly, we still maintain that our target of $1250 could be met in the coming days and we anticipate that a number of fragile economic readings or a dovish stance by the Fed will easily create tailwinds to help the current rally for gold to achieve this target.
Closer to home, it is all about the triggering of Article 50 and how the British prime minister intends to unite the people. The country is divided and this is the biggest task that currently rests in her hands. Theresa May is going to start touring the UK in an attempt to bring the country together and create more support for Article 50.