The U.S. dollar is struggling to rise and this is sending shockwaves throughout the Foreign Exchange Market. The task ahead now is for the top players to issue enough guidance to all lower players involved in the market instead of just leaving them to pick up the pieces.
In the face of economic turmoil, the U.S. dollar shows signs of weakness and some experts are becoming a bit optimistic about its ability to weather the storm that is setting on the horizon due to changes made by the new president of the United States. This came in the wake of the Feds tightening policy concerning the dollar in which they decided to increase interest rates 0.25% in an effort to have rates be at 1.0%, which will give them the upper hand.
President Donald Trump’s political program is a turn off for some investors while for others it is a good enough deal. However, if the majority of players in the market losses confidence in the president’s policies the dollar will begin to get risky and may start seemingly stand on shakier ground. In the coming months, the markets will have to play it safe with investors’ curiosity rising because of the negative role the dollar has played in the last couple of days.
In the wake of the uncertain economic crisis, other markets are having their fair amount of trouble as well. The Asia dollar lost some momentum recently while concerns about being called a currency manipulator forced the Chinese to draw a line to stop their currency from falling too far. In the meantime, Japanese investors are running for cover after the yen had some trouble in 2016.
The French presidential vote to be held next month, the elections in Germany, which will take place in September and the North Korea crisis getting worse can have a negative impact on the U.S. dollar and send foreign exchange pundits looking for a way out.
The bottom line is that for the dollar to settle down and start rising again or to reach a stage of normalization the Feds will have to gather momentum and normalize the country’s interest rates while in the meantime steer clear away from inflation. In addition, they can make better monetary policy decision in an effort to give the dollar the boost that it needs to start performing positive again.
The Feds have lost their power to be the only ones to call the interest rates as the European Central Bank is in the process of developing their own means of calling and dealing with interest rates, which they hope to start in the not so distant future. The Bank of England is also looking to get in on the money and may start rolling the dice for higher rates as well.
Furthermore, President Trump will have to make good fiscal policy decisions so that investors and consumers alike can have some form of confidence in the U.S. economy. If by any chance his fiscal policies should become derailed, then the country and the world will have to settle for a shaky dollar, one that will send a message saying that the U.S. is in trouble.
Inflation is another big factor that can affect the dollar as well. Still, the decisions the Feds make in the next couple of days may either increase or lower inflation in the country. If by any chance France and Germany should beat the popular “vote test”, the dollar might be seeing worse days to come.
Moreover, the world’s economic climate is another factor that can either turn the dollar into a positive or negative. For example, the European elections that are coming up can have an effect on the U.S. currency. For the U.S. dollar to stabilize and even show signs of recovery, all major players will have to play their part well.