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Could Fed meeting prompt US dollar rebound?

business-articlesCould Fed meeting prompt US dollar rebound?
  • USD exchange rates look to recover ground on Fed policy announcement
  • Weak housing data forecast to weigh on Canadian dollar
  • Euro braces for latest ECB Economic Bulletin
US dollar to find support on hawkish Fed signals
In the wake of the US midterm elections the mood towards the US dollar has turned bearish, with investors discouraged by the prospect of a fresh political deadlock.
However, USD exchange rates could find a rallying point tonight if the Federal Open Market Committee (FOMC) policy announcement proves sufficiently hawkish.
As long as Fed policymakers indicate that a December interest rate hike is still on the cards this should encourage the US dollar to return to a stronger footing.
Any signs that the Fed expects to pursue a less aggressive pace of monetary tightening may prompt a fresh round of US dollar selling, on the other hand.
Canadian dollar vulnerable to weaker housing market data
Canadian dollar exchange rates look vulnerable to fresh losses this afternoon if the new housing price index shows a slowdown in September.
Fresh signs of weakness within the Canadian housing market would further undermine confidence in the health of the wider economy.
Falling house prices may point towards a further easing in domestic inflation, giving the Bank of Canada (BoC) less incentive to raise interest rates again in the foreseeable future.
If the house prices index beats forecasts, though, this may offer the Canadian dollar a rallying point.
Could ECB Economic Bulletin encourage euro rally?
The European Central Bank’s (ECB) latest Economic Bulletin could encourage the euro to gain some ground against its rivals this morning.
If the ECB bulletin expresses confidence in the economic outlook, in spite of recent signs of slowdown, this would give the single currency a boost.
Evidence of a more dovish policy outlook, meanwhile, could see EUR exchange rates slump as the prospect of further monetary policy tightening diminishes.
As long as markets continue to see a reason to expect an end to the quantitative easing programme in December, however, the downside potential of the euro may prove limited.
Upcoming Data:
Thursday, 8th November 2018
09:00 EUR European Central Bank Economic Bulletin
13:30 CAD New Housing Price Index
19:00 USD Federal Open Market Committee Rate Decision
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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