Easing U.S.-Mexico trade tensions and a bit of risk aversion pushed the dollar higher last week. Which catalysts can affect its price action this time?
FOMC statement (June 19, 7:00 pm GMT)
The biggest story for the dollar this week is the Fed’s monetary policy announcement.
If you recall, the central bank kept its rates steady in May as many had expected. What boosted the dollar, however, is Chairman Fed Powell downplaying issues mentioned in the official statement.
While he acknowledged Uncle Sam’s low inflation, consumer spending, and business investment, he also hinted that they might be “transitory” and that the Fed’s policies remain “appropriate right now,” enough that members “don’t see a strong case for moving in either direction.”
This week market geeks aren’t expecting any policy changes from FOMC members. June releases tend to be more closely watched compared to most months of the year, though, and this time will be no different.
For one thing, the central bank will be printing its revised economic AND dot plot projections. Powell will also hold a presser after the release so you can bet that traders will look for clues on the direction of their monetary policies (markets are pricing in two more rate cuts by the end of 2019).
If Powell and his team repeat their plan to be “patient” for at least a couple more months, then we could see the dollar trade higher against its counterparts.
But if FOMC members hint that downside growth and inflation risks have finally taken their toll on their optimism and that they’re ready to “act as appropriate to sustain the expansion,” then we could see the Greenback trade lower across the board.
Housing-related reports don’t usually influence the dollar’s price action for long, but they can support the Greenback’s intraweek trends if numbers prove significant enough.
NAHB’s housing market index (June 17, 3:00 pm GMT) is expected to come in at 67.0 after printing at 66.0 in May.
Building permits and housing starts (June 18, 1:30 pm GMT) are also predicted to print somewhat better figures from last month’s releases.
Last but not the least, existing home sales, which will be published AFTER the FOMC event, is projected to reflect 5.26M new sales compared to April’s 5.19M figure.
Manufacturing and services indices
If the Fed and housing releases aren’t enough to satisfy your news-trading appetite, then you might want to pay attention to manufacturing and services-related indices coming up this week.
New York’s manufacturing index (June 17, 1:30 pm GMT) could print a much lower reading (12.1 vs. 17.8 previous) in June. Ditto for the Philly Fed manufacturing index (June 20, 1:30 pm GMT), which is expected to come in at 10.6 against May’s 16.6 figure.
And then there are Markit’s flash manufacturing and services PMIs (June 21, 2:45 pm GMT), which are expected to come in at 50.5 (vs. 50.5 in May) and 51.0 (vs. 50.9 in May) respectively.
Missed last week’s price action? Read USD’s price recap for June 10 – 14!