The PCE deflator will be extremely important today. The market looks at this very much as one of Fed's main indicators. If it's strong the market will not only be looking for a rate hike at this meeting but next time around as well.
The PCE deflator will be extremely important today. If it's strong the market will not only be looking for a rate hike at this meeting but next time around as well.
If we see inflation to continue to come in on the soft side, then the market will intensify its speculation that the peak in U.S. rates is quite close.
It's just a little bit of a correction on the yen front. The Nikkei (stock market average) was down quite sharply overnight but everything points to a stronger yen still developing.
The market is still concerned about the interest rate and whether the Fed is on a possible pause.
The market is now looking for some further rate hikes in the U.S. and that is going to keep the dollar supported in the near-term.
The market is assuming that the ECB won't be hiking rates in the next couple of months. The way is open for the euro to decline further.
During that (November) period the U.S. assets market was performing quite strongly. But I think in the coming months we are going to see some softness in that data as well.
Portfolio flows had been the main driving force behind dollar strength. During the summer months we see a slowdown in financial market activity, and this reduces the flows into the U.S. and hence reduces support for the dollar.
Portfolio flows had been the main driving force behind dollar strength, ... During the summer months we see a slowdown in financial market activity, and this reduces the flows into the U.S. and hence reduces support for the dollar.
Expectations in the bond market have been high, thus any disappointment over the auction (particularly with the level of foreign participation) could put the dollar under renewed pressure.
Failure to meet market expectations here will reinforce the market perception that the peak in US rates is clear, putting the dollar under renewed pressure.