The dollar saw mixed price action last week. Can this week’s catalysts inspire uniform directional bias?
Here are factors that you should look at:
Over the next couple of days, we’ll see manufacturing-related data that could confirm or weaken the better-than-expected reports that we saw last week.
The Empire State manufacturing index (Sept 16, 1:30 pm GMT) is expected to dip from 4.8 to 2.0 in September; industrial production (Sept 17, 2:15 pm GMT) could improve by 0.1% after dipping by 0.2% in July, and Philly Fed’s manufacturing index (Sept 19, 1:30 pm GMT) might drop from 16.8 to 10.8 in September.
Last week’s sprinkle of strong production and manufacturing-related data might not have translated to broad strength for the dollar, but they could lay the foundation for more gains for the currency if this week’s numbers also print better than what markets are expecting!
FOMC statement (Sept 18, 7:00 pm GMT)
After cutting its rates for the first time since the recession, the Fed is expected to follow up with another 25-basis point interest rate cut to 1.75% – 2.00% this week.
Everyone and his momma are already expecting the move, however. This is why traders are looking at the Fed’s future policy biases for potential volatility.
Some believe that, between the absence of truly alarming data, low key cooling off of trade tensions between the U.S. and China, and the number of FOMC members who are uncomfortable with further easing, Powell and his gang will probably be done for the year. Meanwhile, others price in at least one more rate cut after this one.
Luckily for us, the Fed is also printing its dot plot chart this week, which is the best way to gauge the members’ (both voting and non-voting) biases right now.
Powell is also slated to give a speech, though market geeks think he’ll mostly just stick to the “mid-cycle adjustment” line and throw in a bit of dovishness so as not to shock the markets when they continue to ease in the next few months.
Missed last week’s price action? Read USD’s price recap for September 9 – 13!