Below, a quick round up from the spread betting companies
on why we are seeing pressure on the US dollar:
- trending_downCMC: The dollar tumbled further overnight with EUR/USD pushing above $1.1500.
Further splits in Republican ranks have cast doubts on Trump’s healthcare reforms… and that suggests any other reforms are less likely in both the short-term and the long-term.
The fractious political situation in the US and UK is helping the euro. Not many of us would have predicted that a year ago.
- trending_downSpreadex: Naturally, the US dollar does not care about the healthcare bill.
It’s more a question of what it means for The Donald’s ability to actually get anything done… will the US ever see his infrastructure and tax plans come in effect?
- trending_downLCG: The probability of a December rate hike has fallen to 42.3% on the back of soft macroeconomic data.
The reflation trend based on increasing money supply and/or reducing taxes was triggered by the President’s promises but that trend is waning. This also means the Federal Reserve hawks are losing their standpoints.
The slowdown in US inflation looks like it’s a medium term trend and not just a short-term blip.
… and last week, Janet Yellen, the Fed Chair, also queried the current administration’s ability to carry out any substantial fiscal reforms let alone hit the 3% growth target.
USDJPY Breaks Major 38.2% Retracement Support
- trending_upLCG: The divergence of the Federal Reserve and BoJ policies is still supportive of a stronger USD/JPY.
USDJPY broke the major 38.2% retracement support at ¥112.32, i.e. the June – July rise and has now extended gains to ¥111.99.
The weakness in the dollar is the main cause of the current drawback.
Traders should be seeking dip buying opportunities as soon as the USD sell-off loses momentum.
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