Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

U.S. Dollar Soars As Investors Look To FOMC

By Kathy LienForexJun 11, 2021 04:17PM ET
www.investing.com/analysis/us-dollar-soars-as-investors-look-to-fomc-200585650
U.S. Dollar Soars As Investors Look To FOMC
By Kathy Lien   |  Jun 11, 2021 04:17PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
The U.S. dollar ended the week higher against all of the major currencies with today’s rally, a delayed reaction to Thursday’s inflation report. Stronger-than-expected consumer confidence also helped to boost demand for U.S. dollars ahead of next week’s Federal Reserve monetary policy announcement. U.S. policy-makers have insisted that the increase in inflation is transitory, with disappointing consumer spending and labor market numbers discouraging taper talk next week.
 
However, many central banks in weaker recovery positions have begun the process of policy normalization by reducing asset purchases, so there’s growing belief that it is high time for the Federal Reserve to do so as well. It will be a close call next week because the Fed has consistently downplayed price pressures, but the 5% year-over-year CPI increase is the largest in more than a decade. Excluding food and energy, the increase was the largest in nearly three decades. No other major country is running inflation as hot as the U.S., and the problem is that the high prices for travel, food and autos may not fall as quickly as the Fed anticipates as some of these businesses look to recoup lost income.
 
The rally in the U.S. dollar and rise in Treasury yields tells us that investors expect policy-makers to discuss tapering and make subtle shifts in their language to prepare for that eventuality. With the market divided on which way the Fed will sway, Tuesday’s retail sales report will go a long way in setting expectations for Wednesday’s policy meeting.
 
Speculation about Fed taper talk and the European Central Bank’s decision to avoid the discussion sent EUR/USD tumbling on Friday. With no major Eurozone economic reports on next week’s calendar, the euro will take its cue from the market’s appetite for U.S. dollars. Sterling weakened despite mixed data. Monthly GDP growth and the trade balance were stronger than expected, but industrial production unexpectedly declined. It is now widely believed that the UK’s target for a full reopening will be delayed from June 21 to the end of the month due to rising COVID cases. UK Chancellor Rishi Sunak said he could accept a delay of up to four weeks. As we mentioned in yesterday’s note, a delay would hurt sterling. Next week is a busy one for the UK, with inflation, employment and retail sales reports scheduled for release.
 
The New Zealand and Australian dollars were the worst performers, with NZD falling on the back of disappointing manufacturing data. While the country’s PMI manufacturing index rose from 58.3 to 58.6, this increase barely offset last month’s sharp decline. New Zealand is further along its recovery than the U.S., and the Reserve Bank of New Zealand is less dovish than the Fed, but as a high-beta currency NZD is exceptionally vulnerable to risk appetite and demand for U.S. dollars. New Zealand first quarter GDP numbers are due for release next week. Data in Australia was less impressive, which explains the decline in AUD. Labor market numbers are due from Australia and, after two months of subdued job growth, investors are hoping for a stronger recovery in jobs. USD/CAD rose to its strongest level in three weeks, but a broader recovery hinges on Fed optimism.
U.S. Dollar Soars As Investors Look To FOMC
 

Related Articles

U.S. Dollar Soars As Investors Look To FOMC

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (24)
ruby lin wan yi
ruby lin wan yi Jun 13, 2021 10:01AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
how about Monday morning ? gold will going up again ? to 1889
Steve Grossman
Steve Grossman Jun 12, 2021 3:32PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
‘Rise in treasury yields’ ? They are crashing.
Bellamy Fernades
Bellamy Fernades Jun 12, 2021 12:48PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
hello friends is me bellamy James so let we start okay
Bellamy Fernades
Bellamy Fernades Jun 12, 2021 12:44PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
can we still negotiate on this
Festus Easy
Festus Easy Jun 12, 2021 12:44PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
yes
Bellamy Fernades
Bellamy Fernades Jun 12, 2021 12:43PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
because all my life is there so I don't know but this market that much
Bellamy Fernades
Bellamy Fernades Jun 12, 2021 12:41PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
tell us how okay tell me how Kathy Lien
Ioannis Lazaridis
Ioannis Lazaridis Jun 12, 2021 11:42AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
...and rise in Treasury yields tells us... If Kathy refers to last week , she made a mistake. Treasury yields fell.
NUNO LOUREIRO
NUNO LOUREIRO Jun 12, 2021 10:23AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I like this "market narrative" dollar high as a late reaction to inflation..... But when they talk about the stock market the narrative is, inflation?? Is temporary
Bellamy Fernades
Bellamy Fernades Jun 12, 2021 10:23AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
you do like it right
Muhammad Younis
Muhammad Younis Jun 12, 2021 10:19AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I wanna do job but i don't have any idea :(
Festus Easy
Festus Easy Jun 12, 2021 10:19AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I will like to teach you and you will know it better ok
Mahesh Desappriya
Mahesh Desappriya Jun 12, 2021 3:50AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email