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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
USD Forex Pairs Keltner Channel from MarketMilk
USD Forex Pairs Keltner Channel from MarketMilk
  • Simple AND exponential moving averages are showing the dollar’s short and long-term downtrends across the board
USD Forex Pairs EMAs from MarketMilk
USD Forex Pairs EMAs from MarketMilk
  • The dollar has seen the most volatility against the pound and the comdolls in the last seven days
USD Forex Pairs Volatility from MarketMilk
USD Forex Pairs Volatility from MarketMilk

Missed last week’s price action? Read USD’s price recap for Dec. 7 – 11!