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Where is the dollar heading to? A review of major catalysts for the next week
The weighted average dollar index DXY has been trending upwards from the end of September and a fair question is where the end of the rally is. I am not a big fan of technical patterns but applying a quick sketch of channel lines on the chart we can see a rather clear resistance point, at least from where bidding on further rally may be a mentally hard decision. Of course, it makes sense if we assume that the medium-term trend, we are talking about has some inertia. Such resistance could be expected at around 98.00 points.
What led the dollar here and what drivers are there for the American currency to grow further? Considering the situation with a “bird’s-eye view”, discrepancies in the fundamental picture of the market arise when assessing the three next points: the economic outlook for the United States abroad, the state of the American economy, and the Fed’s policies related to it. The collapse of oil prices by more than 20% from $80 per barrel to $50 steals the so-welcomed inflationary impulse from developed economies. This is especially clearly seen in the Eurozone and Japan and may contradict the commonplace view that lower oil will help firms to save up on costs.
If we chart together the yield on German 10-year bonds and the oil price, it is evident that energy prices somewhat lead the yield movement in the Europe’s fixed income market.
What led the dollar here and what drivers are there for the American currency to grow further? Considering the situation with a “bird’s-eye view”, discrepancies in the fundamental picture of the market arise when assessing the three next points: the economic outlook for the United States abroad, the state of the American economy, and the Fed’s policies related to it. The collapse of oil prices by more than 20% from $80 per barrel to $50 steals the so-welcomed inflationary impulse from developed economies. This is especially clearly seen in the Eurozone and Japan and may contradict the commonplace view that lower oil will help firms to save up on costs.
If we chart together the yield on German 10-year bonds and the oil price, it is evident that energy prices somewhat lead the yield movement in the Europe’s fixed income market.
The weighted average dollar index DXY has been trending upwards from the end of September and a fair question is where the end of the rally is. I am not a big fan of technical patterns but applying a quick sketch of channel lines on the chart we can see a rather clear resistance point, at least from where bidding on further rally may be a mentally hard decision. Of course, it makes sense if we assume that the medium-term trend, we are talking about has some inertia. Such resistance could be expected at around 98.00 points.
What led the dollar here and what drivers are there for the American currency to grow further? Considering the situation with a “bird’s-eye view”, discrepancies in the fundamental picture of the market arise when assessing the three next points: the economic outlook for the United States abroad, the state of the American economy, and the Fed’s policies related to it. The collapse of oil prices by more than 20% from $80 per barrel to $50 steals the so-welcomed inflationary impulse from developed economies. This is especially clearly seen in the Eurozone and Japan and may contradict the commonplace view that lower oil will help firms to save up on costs.
If we chart together the yield on German 10-year bonds and the oil price, it is evident that energy prices somewhat lead the yield movement in the Europe’s fixed income market.
What led the dollar here and what drivers are there for the American currency to grow further? Considering the situation with a “bird’s-eye view”, discrepancies in the fundamental picture of the market arise when assessing the three next points: the economic outlook for the United States abroad, the state of the American economy, and the Fed’s policies related to it. The collapse of oil prices by more than 20% from $80 per barrel to $50 steals the so-welcomed inflationary impulse from developed economies. This is especially clearly seen in the Eurozone and Japan and may contradict the commonplace view that lower oil will help firms to save up on costs.
If we chart together the yield on German 10-year bonds and the oil price, it is evident that energy prices somewhat lead the yield movement in the Europe’s fixed income market.