Seasonal Dollar Strength Slowdown Before The Long Weekend
Historically, the Greenback has rallied during the month of May for 9 out of the past 10 years. This month has not been an exception as a series of positive US economic data and optimistic, hawkish Fed speakers added reason to believe there will be multiple rate hikes this year and we saw the US Dollar rally against its major counterparts.
The last couple of days the USD has lost some of its momentum as the Fed has taken a more dovish stance toward June’s possible rate hike. The chatter now is that there will be no increases until July. Of course time will tell.
Will Ms. Yellen Shed Light On Rates?
Today, Fed Chair Janet Yellen may shed light on the situation as she discusses interest rates with Harvard professor Greg Mankiw. While the conversation may reveal some insights, she also has a major policy speech planned for June 6, and so it is not likely she would pre-announce any significant changes to her outlook. It is significant, however, that she is speaking today as this Friday marks the start of a three-day weekend in the US and the UK. That means as the day nears its market close in the US, the Forex market will see reduced liquidity and there is potential for an exaggerated response to Ms. Yellen’s commentary.
This is a good time to stay out of the Forex market and enjoy the long weekend without any newly opened trading positions. Once the markets re-open after the long weekend, we should see the initial market reactions from Friday’s data settle down and we will be looking for opportunities for Forex Signals.
Brexit – Forex Traders Brace Themselves
In light of the upcoming referendum on June 23rd, the pound’s volatility against the Greenback is at its highest in 6 years. The word on the street is pointing toward high probability of Britain remaining in the EU, but even minor shifts in public opinion creates volatile currency reactions. With 4 weeks of the volatile campaign left, Forex traders need to be careful against the possibility of either outcome.
In the meanwhile, the cable has reversed most of its losses from its year and it up above 1.4630 as of Friday May 27th after being down as low as 1.3834 in February.
Read article on Bloomberg.
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