Lots of economic reports scheduled this week! Which ones could actually move the Greenback? Here’s a list for ya.
FOMC member speeches
Tomorrow at 5:00 pm GMT FOMC voting member Raphael Bostic is scheduled to make a speech in Alabama.
Voting member Randal Quarles is next in Idaho on Wednesday at 3:00 pm GMT, followed by another one by Bostic on Thursday at 4:00 pm GMT.
Fed members have already given their two cents in their latest policy decision. If you recall, the team went all hawkish on us by upgrading their economic forecasts AND their rate hike projections.
Bostic and Quarles are unlikely to share anything that they haven’t already shared in the past couple of weeks, but watch their speeches in case they do share a bombshell or two.
Top-tier U.S. reports
Uncle Sam has a lot of top and mid-tier reports scheduled over the next couple of days including the core durable goods and goods trade balance data on Wednesday and final GDP reading on Thursday.
While these reports could provide good intraday volatility for the Greenback, they’re unlikely to dictate the dollar’s price action. That is, unless they threaten the Fed’s upbeat outlook or ride on an existing market theme like what happened when Philadelphia Fed’s PMI was released (see details below).
Trade war concerns
A few hours earlier the Donald warned “all countries that have placed artificial Trade Barriers and Tariffs” on the U.S. that they will be met with “more than Reciprocity.”
The tweet comes after Trump threatened 20% additional tax on cars from the EU and before WSJ reported that the administration is considering discouraging Chinese investors from getting their hands on U.S. tech.
If China or one of Uncle Sam’s other major trading partners roll out their reciprocal measures, or if Trump steps up his threats, then we could see renewed risk aversion that could push U.S. Treasury yields higher and also affect U.S. equities price action.
Keep your eyes glued to the tube (or on Twitter)!
Last Week’s Price Review
Last week’s Greenback surge apparently didn’t have a lot of momentum since the Greenback is currently mixed but still a net winner this week (as of 5:00 pm GMT).
The Greenback opened the week on a mixed footing and then proceeded to trade roughly sideways.
Greenback bulls became active come Tuesday, though. And the apparent trigger for that is Former U.S. Treasury Secretary Lawrence Summers’ interview since Summers was asked about the effects of a trade war on the U.S. economy and he answered by saying that:
“Trade war is not likely to be large enough that its direct effects damage the economy profoundly.”
The Greenback then traded broadly higher after that before becoming a bit more mixed. Buyers were ever-present, though, since most USD pairs continued to tilt to the upside.
At any rate, the Greenback got a fresh bullish injection on Wednesday, apparently because of Fed Chair Jerome Powell’s comment that:
“With the economy strong and risks to the outlook balanced, the case for continued gradual increases…remains strong.”
Market analysts noted that the above comment caused U.S. bond yields to rise as rate hike expectations got reinforced, which likely gave the Greenback additional support.
Moving on, the Greenback continued to trade broadly higher before getting swamped by sellers on Thursday.
Market analysts were blaming the Philadelphia Fed’s very poor manufacturing PMI reading (19.9 vs.28.9 expected, 34.4 previous) for the Greenback’s slide.
But as marked on the overlay of USD pairs above, the Greenback was already sliding ahead of the report. There was no clear reason for the Greenback’s slide ahead of the report. However, it’s possible that the Greenback was weakened by traders flocking to the pound because of the BOE’s hawkish surprise.
Anyhow, the Greenback continued to trade broadly lower after that, although most USD pairs began to find support by Friday’s U.S. session.