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US dollar extends gains on Federal Reserve interest rate hike bets

business-articlesUS dollar extends gains on Federal Reserve interest rate hike bets
  • US dollar continues to benefit from Fed interest rate hike expectations
  • Oil price moderation limits demand for Canadian dollar
  • New Zealand dollar looks for boost from retail spending data
 
Fed interest rate hike bets keep US dollar on strong form
 
Growing market confidence in the prospect of another imminent Federal Reserve interest rate has kept the US dollar on a generally solid footing.
 
However, the mood of USD exchange rates could sour this morning if September’s NFIB small business optimism index falls in line with forecasts.
 
Signs of easing domestic confidence could diminish the case for a Fed rate hike, leaving the US dollar to trend lower against its rivals.
 
Even so, as long as the index remains in positive territory any impact on USD exchange rates is still likely to prove limited.
 
 
Can Canadian dollar shake off oil market worries?
 
Demand for the Canadian dollar eased in response to the small decline in oil prices, with the market tempered by signs that at least some Iranian oil exports are likely to continue.
 
The more limited effect of US sanctions suggests that global supply will remain elevated for some time to come, weighing heavily on crude prices and the commodity-correlated Canadian dollar.
 
A rallying point may be in store for CAD exchange rates this afternoon, however, as forecasts point towards an uptick in Canadian housing starts.
 
Evidence of greater strength within the domestic housing market is likely to bolster the confidence of Bank of Canada (BOC) policymakers, to the benefit of the Canadian dollar.
 
 
Stronger retail card spending may offer NZD exchange rate boost
 
New Zealand dollar exchange rates are looking for further support this evening with the release of September’s retail card spending data.
 
An increase in spending on the month would suggest that domestic confidence is strengthening, in spite of persistent doubts over the health of the New Zealand economy.
 
However, rising household reliance on debt is unlikely to give the Reserve Bank of New Zealand (RBNZ) any cause for confidence.
 
If investors continue to see a risk of the RBNZ cutting interest rates in the months ahead the mood towards the New Zealand dollar is unlikely to improve.
 
Upcoming Data
 
Tuesday, 9th October 2018
11:00 USD NFIB Small Business Optimism
13:15 CAD Housing Starts
22:45 NZD Retail Card Spending
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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