The US Dollar (USD) turns flat to a touch softer on Friday with some profit-taking after steep rallies against many major G20 currencies this week. The slight retracement comes on the back of Chinese economic data and more details on the stimulus package the Chinese government is rolling out. With Chinese deposit rates being cut this Friday and more details released on the Chinese stimulus package, it looks like China is propping up its economy further.
The US calendar is very light in terms of economic data. No real market-moving data points will be issued on Friday, with only Building Permits and Housing Starts on deck. Instead, look for the Federal Reserve (Fed), where no less than three members are set to speak.
The US Dollar Index (DXY) sees the rally train come to a halt, with some better-than-expected Chinese data and measures taken by the Chinese government to support domestic demand. Though this rally might face a small fade, a big reversal does not seem to be in the cards. With the interest rate gap between the US, the Euro and other currencies widening again, the Greenback should at least remain supported towards the US elections in November.
A firm resistance ahead is 103.80, which aligns with the 200-day SMA. Above that, there is a small gap before hitting the pivotal level at 103.99 and the 104.00 big figure. Should Trump further lead in the polls, a rapid swing up to 105.00 and 105.53 could be on the cards.
On the downside, the 100-day SMA at 103.19 and the pivotal level at 103.18 are now acting as support and should prevent the DXY from falling lower. With the Relative Strength Index in overbought territory, a test on this level looks granted. Further down, the 55-day SMA at 101.85 and the pivotal level at 101.90 should avoid further downside moves.
US Dollar Index: Daily Chart
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
© 2000-2024. Bản quyền Teletrade.
Trang web này được quản lý bởi Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
Thông tin trên trang web không phải là cơ sở để đưa ra quyết định đầu tư và chỉ được cung cấp cho mục đích làm quen.
Giao dịch trên thị trường tài chính (đặc biệt là giao dịch sử dụng các công cụ biên) mở ra những cơ hội lớn và tạo điều kiện cho các nhà đầu tư sẵn sàng mạo hiểm để thu lợi nhuận, tuy nhiên nó mang trong mình nguy cơ rủi ro khá cao. Chính vì vậy trước khi tiến hành giao dịch cần phải xem xét mọi mặt vấn đề chấp nhận tiến hành giao dịch cụ thể xét theo quan điểm của nguồn lực tài chính sẵn có và mức độ am hiểu thị trường tài chính.
Sử dụng thông tin: sử dụng toàn bộ hay riêng biệt các dữ liệu trên trang web của công ty TeleTrade như một nguồn cung cấp thông tin nhất định. Việc sử dụng tư liệu từ trang web cần kèm theo liên kết đến trang teletrade.vn. Việc tự động thu thập số liệu cũng như thông tin từ trang web TeleTrade đều không được phép.
Xin vui lòng liên hệ với pr@teletrade.global nếu có câu hỏi.