The dollar under pressure from weak economic data and the risk of low rates

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Economic data and comments of fed officials controlled the change of the US dollar last week. The statistics were weak, which caused concern about economic growth. The review also reported that the fed may be considering the pace of future rate hikes. Geopolitical events and stock market volatility also led to outbreaks of high volatility.
While most traders were focused on the employment report in the US, a couple of stronger-than-expected report slipped by almost unnoticed. The index of business activity in the manufacturing sector and the non-manufacturing sector was better than forecast. However, the slow increase in the number of jobs suggests that economic growth may slow down. Fed members are reportedly discussing the approach of “wait and see” after a possible rate hike at the December meeting.
Protocols of the November FOMC meeting showed that the members of the Council fear the effects of trade tensions and corporate debt on economic growth that, according to some, means that the FOMC may pause the regular rate increase in 2019. Deputy Chairman of the Federal reserve Richard Clarida in the discussion about inflation has made clear that it is better not to reach the target level than to exceed it. The dollar is also weighing a decline in Treasury yields. This alarm can indicate a potential economic problems in the future.
The extreme volatility of the stock market encourages investors to dump risky currencies, while boosting the demand for safe assets. This has caused the strengthening of the Japanese yen and the decline in commodity currencies against the dollar. Concerns about the possible escalation of a trade dispute between the United States and China also weaken the dollar.
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Yevgeny Abramovich
Analyst
Forex broker FXOpen