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Weekly Roundup: Increased Federal Reserve caution limits US dollar upside

currency-newsWeekly Roundup: Increased Federal Reserve caution limits US dollar upside
Federal Reserve policymakers adopted a less optimistic tone in recent comments, suggesting that monetary policy is likely to see a slower pace of tightening in the months ahead and leaving the US dollar under pressure.

While the odds of a December interest rate hike remain fully priced in, investors see less chance of rates rising substantially in 2019.

With Fed policymakers appearing more reticent the mood towards the US dollar soured somewhat, especially in the wake of a weaker-than-expected personal consumption expenditure core figure.

Even though November’s Chicago PMI showed a significant leap on the month, rising from 58.4 to 66.4, this was not enough to keep USD exchange rates on an uptrend for long.

A similarly strong performance from the latest ISM manufacturing and non-manufacturing indexes could offer the US dollar a boost, however.

As long as the world’s largest economy continues to show signs of resilience the downside potential of USD exchange rates should prove limited.

Further volatility is expected on the back of November’s non-farm payrolls report, with forecasts pointing towards a more limited uptick in employment on the month.
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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