Why the US dollar’s downside correctional probability is serious?
– September was a good month for the US dollar. The dollar has been strengthened by more than two percent against the Japanese yen, more than 1 percent against the Swiss franc and the Australian dollar, and has grown almost the same vs the euro. The only currency that grew significantly against the US dollar was the British pound. The pound also strengthened after the Bank of England raised its interest rates in the next months. However, it is likely that Power of Dollar Buyers decreases in October, and the possibility of a bearish correction of the US dollar is seriouse.The US economic outlook and the prospect of contraction-oriented policies by other global central banks are the main reason for such a claim.
– It is expected that in October we will see the negative economic consequences of the Harvey and Irma storms on the American economy. All US Federal Reserve economists and officials have warned that US October data will temporarily be weaker than expectations, but based on the performance of the US dollar and stock markets, it seems investors are not prepared to see the continuing weakness of US reports. Although US economic indicators will be recovered in the coming months, economists are not very optimistic about this week’s reports. The US Employment Reports (NFP) will be released this week, and economists expect US employment growth to be just 75,000, which is actually the weakest employment growth in the past six months.
– In July and August, we also saw weak US employment growth, and a weak report this week could also affect negatively on the possibility of raising interest rates in December. At the September meeting of the Federal Reserve, officials announced they would continue to raise interest rates. The Federal Reserve’s Fed estimates would signal another increase in interest rates in 2017, and the Federal Reserve would be prepared for the next three steps to raise interest rates in 2018. However, the Federal Reserve officials’ speech last week was not so Inclined to raising interest rates in the near future, and data related personal income and expenditure of consumers was relatively weak.
– This week, we will have more lectures from the US Federal Reserve officials, and their opinions may be different, but it should be noted that even positive comments in last week by Janet Yellen, the head of Federal Reserve, could not support the US dollar. Part of this pessimism to the market toward the third step of raising interest rates returns at a time zone exist to the next step is to raise interest rates. Since now to December, a lot of events can happen. Maybe the US economic indicators are recovered and maybe continue to this weak current trend, however, there is a lot of time to decide..