The Fed is up this week!
What are markets expecting and how can you trade the dollar this week?
I’ve got a list of potential catalysts that you should keep close tabs on!
FOMC statement (Dec 16, 7:00 pm GMT)
- As expected, the Federal Open Market Committee (FOMC) kept its policies unchanged in November while the U.S. finalizes its Presidential election results
- Governor Powell shared that financial conditions are accommodative but that the pace of the economy has moderated and needs fiscal stimulus
- Analysts don’t see Powell and his gang making policy changes in December
- Expect calls for more fiscal stimulus, as well as hints that the central bank will buy more longer-term government bonds sometime next year
Other closely watched reports
- Industrial production (Dec 15, 2:15 pm GMT) expected to slow down from 1.1% to 0.3% in November
- Retail sales (Dec 16, 1:30 pm GMT) to dip by 0.3% after a 0.3% gain in October
- Core retail sales could slow down from 0.2% to 0.1%
- Markit’s manufacturing PMI (Dec 16, 2:45 pm GMT) could slip from 56.7 to 55.0
- Markit’s services PMI seen at 57.0 after a 58.4 reading in November
- Philly Fed manufacturing index (Dec 17, 1:30 pm GMT) to slow down from 26.3 to 22.2 in December
- Initial jobless claims (Dec 17, 1:30 pm GMT) could shoot up from 853K to 915K
- Building permits (Dec 17, 1:30 pm GMT) to speed up from 0.0% to 0.1%
Dollar demand
- Uncertainty over the next fiscal stimulus deal will continue to dim the dollar’s shine against its major counterparts
- Strong Chinese data releases can improve the demand for the comdolls and extend the dollar’s downtrend across the board
- Brexit updates will factor in the demand for the safe-haven dollar
- Policy decisions by the SNB, BOE, and the BOJ can inspire intraday volatility among the major dollar pairs
- Vaccine updates will continue to factor in the demand for the Greenback
Technical snapshot
- Keltner Channels are pointing at the dollar’s “oversold” status against the Aussie and Loonie
- USD is also nearing oversold status against NZD, EUR, and CHF
- Simple AND exponential moving averages are showing the dollar’s short and long-term downtrends across the board
- The dollar has seen the most volatility against the pound and the comdolls in the last seven days
Missed last week’s price action? Read USD’s price recap for Dec. 7 – 11!