samedi 28 février 2015
Did the Dollar Find its Groove Again?
Posted on 10:07 by nice news
The US dollar traded higher against most of the major currencies over the past week. No thanks to Yellen's testimony before Congress. Market participants took away from her a reduced chance of a mid-year rate hike.
We disagree with the interpretation, seeing her comments as 1) playing down lowflation as transitory and 2) seeing the global influence being overall balanced as the decline in oil prices and interest rates offset the dollar's appreciation. We continue to expect the FOMC to drop its "patient" forward guidance at its mid-March meeting.
The main impetus for the dollar appeared to come from the sharp drop in European interest rates. Germany auctioned five- and seven-year bonds with a negative yield. Record low 10-year yields were recorded in at least eight eurozone members. This includes Ireland's 10-year benchmark yield falling below 1% and Portugal's 10-year yield falling below 2%. Spread compression continues. It is being driven by anticipation of the ECB's sovereign bond purchases.
The ECB's bond buying program is expected to be launched after next week's policy making meeting (in Cyprus). It still appears to be some necessary technical and legal details to be worked out before the Eurosystem can begin implementing the new program.
The Dollar Index held support seen near 94.00 and moved within spitting distance of the high set in late-January just above 95.50. The MACDs are poised to cross higher, as are the slow Stochastics, but the RSI is neutral. On balance, we view the consoldiative phase in recent weeks as building a base for a new leg up.
Over the past month, the market tried several times to push the euro through the $1.15 level. It failed. Previous support in the $1.1265 area may now offer resistance. It is difficult to talk about strong support. The push below $1.1l in late-January was brief. That area remains the next immediate target, but we
We disagree with the interpretation, seeing her comments as 1) playing down lowflation as transitory and 2) seeing the global influence being overall balanced as the decline in oil prices and interest rates offset the dollar's appreciation. We continue to expect the FOMC to drop its "patient" forward guidance at its mid-March meeting.
The main impetus for the dollar appeared to come from the sharp drop in European interest rates. Germany auctioned five- and seven-year bonds with a negative yield. Record low 10-year yields were recorded in at least eight eurozone members. This includes Ireland's 10-year benchmark yield falling below 1% and Portugal's 10-year yield falling below 2%. Spread compression continues. It is being driven by anticipation of the ECB's sovereign bond purchases.
The ECB's bond buying program is expected to be launched after next week's policy making meeting (in Cyprus). It still appears to be some necessary technical and legal details to be worked out before the Eurosystem can begin implementing the new program.
The Dollar Index held support seen near 94.00 and moved within spitting distance of the high set in late-January just above 95.50. The MACDs are poised to cross higher, as are the slow Stochastics, but the RSI is neutral. On balance, we view the consoldiative phase in recent weeks as building a base for a new leg up.
Over the past month, the market tried several times to push the euro through the $1.15 level. It failed. Previous support in the $1.1265 area may now offer resistance. It is difficult to talk about strong support. The push below $1.1l in late-January was brief. That area remains the next immediate target, but we
Did the Dollar Find its Groove Again?
Categories: Did the Dollar Find its Groove Again?
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