This week has been choppy to say the least as stocks swung various directions attempting to rally, commodities advanced as the USD dropped and we watched as crude once again dropped below $32 a barrel. IT’S A WAIT AND SEE SCENARIO RIGHT NOW!!
US Economy Concerns
The Greenback dropped as data was released that showed the US services sector is growing at its slowest pace in nearly two years. As is usually true, when confidence in the US economy falters, the commodity currency pairs such as the Aussie and the Loonie saw gains as speculators put their money on Gold and other industrial metals.
How This Affects Fed Rate Hikes
Slowing of the US economy does not encourage the Fed to raise rates as quickly and steadily as what was previously predicted. It is unlikely to see the Fed raise the interest rates as much this year as was previously expected, but it would not be surprising to see some rate increases as the year progresses.
NFP for February 2016
Across the board, economic analysts are saying that tomorrows NFP release is going to be a big deal. Although the consensus for the NFP release scheduled for February 5, 2016 is projected to show an increase of 190K, if employment is below expectations the Fed rate hike could be on hold for months and that will put huge pressure on the market. Even if employment is above expectations, other factors may dampen the appeal of the Dollar in the months ahead.
At ForexSignal.com we will be following closely as the market reacts and sets the stage for trading the remainder of the month of February.
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